Iraq's new prime minister, president, and government ministers were then sworn in at a ceremony just hours later.
L. Paul Bremer, the U.S.-appointed administrator, handed over legal documents and sovereignty to interim Prime Minister Iyad Allawi at a low-key ceremony in the heavily guarded "Green Zone" in the city shortly before 10:30 a.m. local time today. The ceremony was also attended by interim Iraqi President Ghazi Ajil al-Yawir.
"This is a historic day," Allawi said. He expressed confidence that his government will be able to control the security situation in Iraq.
"You Iraqis must now take responsibility for your future of hope. You can create that future of hope by standing fast against those who kill your police and soldiers, who kill your women and children, who wreck Iraq's pipelines and power lines," Bremer told the interim leaders.
In Istanbul today, Iraq's interim foreign minister, Hoshyar Zebari, made a similar comment shortly before the start of a NATO summit.
"It will be up to us to learn to control our country and to manage the security, and it will be an acid test for us to stand up to that challenge. This is our country, this is our future, and there are many Iraqis who will stand up to that challenge," Zebari said. "I believe, today, we will challenge those elements in Iraq -- the terrorists, the criminals, the Saddamist, the anti-democratic forces -- by bringing even the date of the handover of sovereignty before 30 June as a sign that we are ready for the job."
NATO member states meanwhile agreed at their Istanbul summit, which opened this morning, to offer training to the security forces of Iraq's new interim government. That decision was based on a request from Prime Minister Allawi.
The handover was originally planned to take place on 30 June.
Bremer left Iraq shortly after the ceremony.
A representative for anti-U.S. Shi'a cleric and militia leader Muqtada al-Sadr signaled opposition to the interim government, which he has accused of being U.S.-imposed and thus illegitimate. Ali al-Moussawi, who heads al-Sadr's office in the Sadr City neighborhood of Baghdad, said that "the Iraqi government does not have full sovereignty because the issue of sovereignty and security is jointly [managed] by the Iraqi government and the occupying forces, and the Americans have said on many occasions that they will not leave Iraq."
Iraq's neighbors Iran and Jordan both said they hope the move will speed the end of Iraq's occupation by U.S.-led forces and lead to a government with broad support among the Iraqi people.
Kuwait, whose 1990 invasion by Saddam Hussein's forces was reversed after a U.S.-led coalition intervened in 1991, called the transfer of power "the start of a new era."
Germany, which opposed the Iraq war, said it is prepared to work closely with Iraq's new government on political and economic reconstruction.
British Prime Minister Tony Blair urged international assistance to help the fledgling government combat lawlessness. "We have got to do everything we can by way of training and equipment and support, inside and outside of Iraq, to make sure that that [beating the insurgency] happens," Blair said.
Russian Foreign Ministry spokesman Aleksandr Yakovenko said his country is prepared to offer help to the Iraqi interim government in winning the trust of the Iraqi people and convincing them that occupation is genuinely coming to an end.
In Beijing, Foreign Ministry spokeswoman Zhang Qiyue said her government congratulates the Iraqi interim government and called on the international community to help unite all the Iraqi people and promote a peaceful transition process and realization of self-governance.
European Union spokesman Reijo Kemppinen also said the EU is ready to assist the Iraqi people.
In Iraq, a British soldier was killed in a bomb attack in southern Iraq today while militants threatened to behead a captured U.S. Marine, three Turks, and a Pakistani civilian.
Al-Jazeera television has broadcast a video showing militants holding a man identified as Wassef Ali Hassoun, a U.S. Marine of Lebanese descent. The U.S. military said a soldier by that name has been missing from his unit since 21 June.
Earlier, Al-Arabiya television broadcast footage showing an apparently different group threatening to behead a Pakistani within three days unless Iraqi prisoners are released. Pakistan's Foreign Ministry says it will not accede to the demands.
On 26 June, unknown militants said they would behead three Turks within 72 hours unless Turkey stopped working with U.S. forces.
for complete coverage and analysis of events in Iraq at RFE/RL's dedicated "The New Iraq" webpage.