The border crossing "has been handed over to the central government" of Iraq, Turkish Prime Minister Binali Yildirim told his ruling party at a televised meeting in Ankara.
He said all controls at the border will now be carried out by Iraqi and Turkish officials on their respective sides.
The Iraqi forces deployed at the Ibrahim Al Khalil crossing alongside Turkish forces with whom they have been carrying out joint exercises over the last weeks, the state- run Anadolu news agency said.
The border crossing was closed while the handover was being carried out, leading to long queues, it added. There were no reports of any clashes.
The Kurdish region has found itself increasingly isolated after holding a non-binding independence referendum on September 25 that was opposed not just by Baghdad but also Iran, Turkey and the Kurds' Western allies.
Turkey, which over the last years had cultivated strong trade ties with the KRG, reacted with fury to the referendum, fearing the move could encourage separatism amongst its own Kurdish minority.
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