US forces hunting a kidnapped American soldier entered the Sadr City area of Baghdad on Friday.
US forces have been searching for a soldier kidnapped on Monday
The raid triggered brief clashes with the Mehdi Army, a militia loyal to the local Shia cleric Moqtada al-Sadr.
The soldier was seized on Monday after leaving his base inside Baghdad's fortified "Green Zone" to visit Iraqi relatives in the city.
Elsewhere, police in the northern city of Mosul have reinforced security after insurgents threatened fresh attacks.
Police introduced a vehicle ban in the city and extended an overnight curfew until 1500 local time on Friday, security officials say.
On Thursday insurgents distributed leaflets in Mosul threatening to attack the police and army.
Suicide bombers using vehicles killed about 20 people in one day in a series of attacks in the city last week.
The threat against the police and army in Mosul was made by an insurgent umbrella group called the Mujahideen Shura Council. The group had declared parts of the city an Islamic state.
Recent suicide attacks killed at least 20 people in Mosul
Mosul is Iraq's third biggest city and home to a mix of Sunni Arabs and ethnic Kurds. Violence between the groups is common.
On Thursday at least five bodies, including those of two police officers, were found dumped around the city.
October has been particularly violent in Iraq with around 1,000 Iraqis and nearly 100 US troops killed.
At least 24 Iraqi police and 18 Sunni insurgents were killed on Thursday in a firelight in Baquba, north of Baghdad, the US military has said. One civilian was reported killed.
American troops and aircraft were diverted from a nearby mission to aid an Iraqi police unit which had been ambushed by "anti-Iraqi forces".
Baquba is the capital of Diyala province, an area which has become notorious for sectarian violence and anti-coalition insurgency.
At least 13 police recruits were killed and several abducted on Sunday when insurgents attacked buses carrying the volunteers near the town of Muradiya, in Diyala province.