US security contractors are no longer immune from prosecution in Iraq
Iraqi police have released three of five US citizens detained in connection with the killing in Baghdad last month of a fellow American.
A judge ruled there was insufficient evidence to hold the American security contractors, an Iraqi spokesman said.
The US embassy in Iraq has confirmed the release of only one man so far.
The case has been seen as the first test of a new US-Iraqi security pact which allows US contractors to be subject to Iraqi laws.
The five men were
taken into custody last week
in connection with the murder of Jim Kitterman, a 60-year-old American construction company owner. His body was found bound, blindfolded and stabbed to death on 22 May in Baghdad's highly-fortified Green Zone.
The men were never formally charged with a crime.
US and Iraqi officials have said they were not accused of Mr Kitterman's death, but detained as part of the investigation.
The role of US contractors came under intense scrutiny after the killing of up to 17 civilians in Baghdad in 2007 by private security guards from the US company
The incident led the Iraqi government to revoke the immunity from prosecution that private contractors had enjoyed in the first six years of the war.
new joint security pact
, private contractors are wholly bound by Iraqi law.