Rouhani had arrived in Karbala on Tuesday for visiting the holy shrines of Imam Hussein (AS) and Hazrat Abbas (AS).
He also met leaders of a number of Iraqi tribes while in Karbala.
In Najaf, the Iranian president will visit the holy mausoleum of Imam Ali (AS) and hold meetings with a number of senior clerics, including grand Ayatollah Ali al-Sistani.
He will wrap up his three-day visit to the neighboring country later on Wednesday.
Rouhani, who is accompanied by a political and economic delegation, met with top Iraqi officials, including President Barham Salih and Prime Minister Adil Abdul-Mahdi in Baghdad on Monday.
In a joint statement on Tuesday, Iran and Iraq said they discussed regional issues, common challenges, fight against terrorism and ways to promote security, stability and economic cooperation in the region in line with the interests of its nations.
According to the statement, the two sides emphasized the need for the establishment of security in the Middle East as a contributing factor to the region’s economic growth and development.
It added that Iran and Iraq also expressed their firm determination to battle terrorism and organized crimes, which pose a threat to regional security and peace, calling for collective cooperation to uproot terrorism in all political, intellectual and financial aspects.
The two sides said they held important talks in a cordial and constructive atmosphere and expressed their willingness to enhance relations in various spheres, including politics, security, economy, healthcare, trade, culture, science and technology.
Iran and Iraq further emphasized that the 1975 Algiers Agreement and its attached protocols should be carefully implemented with goodwill and agreed to start joint operation to dredge the Arvand Roud river as soon as possible.