His visit came as Iraqi troops, some of which were trained by the United States, tightened the noose on IS in Ramadi, the capital of Anbar province which the government lost in May.
On his first visit since taking office as defence secretary earlier this year, Carter met Prime Minister Haider al-Abadi and some of the 3,500 US troops deployed in the country.
He also met a number of top Sunni politicians, including the parliament speaker, Salim al-Juburi, and officials from Anbar and Nineveh, the two regions where IS has the largest footprint.
The Iraqi government has instead focused on Anbar, vast western province which stretches from the borders with Syria, Saudi Arabia and Jordan all the way to the outskirts of Baghdad.
Coalition aircraft, which have carried out thousands of strikes in Iraq and Syria during the past year, have lately been hitting dozens of targets in Anbar every week.
"Iraqi security forces are in the process of encircling" Ramadi, said Pentagon spokesman Colonel Steve Warren, who is travelling with Carter.
He would not say when he thought a drive to wrest the city back from IS might be launched in earnest but said it should be a matter of "weeks".
US military advisers have trained 9,000 Iraqi soldiers since their deployment but they had never seen frontline action until a first batch of 3,000 recently joined the Ramadi battle, Warren said.
"This is a development we are very satisfied to hear," he told reporters in Baghdad.
Several hundred US troops are also helping Iraqi forces train local Sunni Arab tribesmen at a large base in Habbaniyah, between Ramadi and the jihadists' other Anbar bastion of Fallujah.
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