Iran says it will attend a key meeting on Iraq's security situation.
Iranian FM Manouchehr Mottaki is due to attend the meeting
A delegation headed by Foreign Minister Manouchehr Mottaki will attend the conference later this week in the Egyptian resort of Sharm el-Sheikh.
US Secretary of State Condoleezza Rice, who is also due to attend, hinted that she could meet Mr Mottaki.
But she said any "encounter" would be a chance to discuss Iraq's security situation, and not specific US-Iranian relations.
"This is not a (conference) about the United States and Iran," she told ABC's This Week program.
"This is a meeting about Iraq and about what Iraq's neighbours and interested parties can do to help stabilize the situation in Iraq," she said.
On Saturday, a car bomb killed 55 people in Karbala, Iraq, home to two of Shia Islam's holiest shrines.
The blast is the second major attack in Karbala this month. Sunni militants are suspected of carrying out the attacks.
Iran has close ties with Shias in Iraq, and has been accused by the United States of arming and training Shia militants for sectarian conflict with Sunnis.
Iraqi Foreign Minister Hoshyar Zebari welcomed the prospect of talks between Iran and the US.
Security efforts are continuing in several areas of Iraq
"I think it's important, it would be a major breakthrough and any reduction in tensions will positively impact the situation in Iraq," he said.
"We don't want Iraq to be a battleground for settling scores on other agendas at our cost. Really, this has been harming us, damaging us a lot."
News that Iran would attend the conference came as Iran's top security envoy Ali Larijani arrived in Baghdad.
The BBC's Frances Harrison, in Tehran, says that Iran had been reluctant to go to the conference because attendance would mean engaging with the United States, which is still holding five Iranians captive in Baghdad.
One Iraqi diplomat described this as a critical time for Iran, a possible turning point in its deteriorating relations with the outside world.
The conference would give Iran a chance to show good faith over Iraq, and also offer an opportunity to mend relations with Washington, our correspondent says.
It comes as US-led forces continue a security crackdown in Iraq.
Overnight the US carried out what it has called a massive effort to disrupt the networks of al-Qaeda in the country.
The US said 72 suspected militants had been detained in raids west and north of Baghdad, in the provinces of Anbar and Salahuddin.
In one raid, near the town of Karmah, the Americans said troops had uncovered 20 large barrels of nitric acid and other bomb-making materials.
In Baghdad, the US military fired an artillery barrage on Sunday morning targeting what reports say were insurgent positions in the south of the city.
The series of loud blasts was heard throughout Baghdad and lasted for about a quarter of an hour.