US President Barack Obama says US troops have withdrawn from Iraq's towns and cities on schedule, but he warned of "difficult days" ahead.
Mr Obama described Tuesday's handover to Iraqis as a milestone, but said the country's leaders would face "hard choices" on politics and security.
As Iraqis celebrated the US withdrawal, a car bomb in the northern city of Kirkuk killed at least 27 people.
In the past two weeks about 250 people have been killed in a wave of attacks.
Iraqi and US troops have been on alert for attacks during the pullback.
As Iraq marked the handover with a public holiday called National Sovereignty Day, President Obama said: "Iraq's future is in the hands of its own people."
"The Iraqi people are rightly treating this as a cause for celebration.