This is the first area outside of Iraq's Kurdish region to be handed over to Iraqi control since the U.S.-led invasion in 2003.
Prime Minister Nuri al-Maliki, who presided over a ceremony in the provincial capital of Samawah to mark the occasion, said the move was a "historic" event.
He also said that if the experience fails, it could lead to a "big setback" to Iraqi efforts to control security.
Security in the province had been the responsibility of British and Australian troops. Japanese noncombat troops also operated in the area, but they are now in the process of pulling out.
The commander of British troops in the area, Colonel Giles Vosper-Brown, said his forces will be ready to provide backup if there is any security crisis. Britain has said the handover of security responsibilities to Iraqi forces does not mean that its forces are withdrawing forces from the region.