The decision was made by Japanese Prime Minister Taro Aso and Cabinet ministers concerned at a meeting of the national security council in the morning.
The government cited improvements in the political and security situation in Iraq, as well as the expiration at the end of the year of a U.N. resolution authorizing the current deployment of multinational forces in the country as reasons for withdrawal.
The ASDF continued its airlift mission in Iraq, even after Ground Self-Defense Force troops were withdrawn from the country in 2006.
The ASDF began airlifting activities in Iraq in March 2004. Deploying around 200 personnel, the ASDF has operated mainly from an airbase in Kuwait, using three C-130 transport planes.
The ASDF is currently airlifting troops and materials for the U.S.-led multinational forces as well as for the United Nations to three airports in Iraq, including the country's capital, Baghdad.
As of Nov. 26, the ASDF had transported around 671 tons of materials in 810 separate airlifts.
Japan announced in mid-September that it would begin mulling complete withdrawal by the end of the year.
The ASDF will dispatch about 70 personnel to form a 130-personwithdrawal work unit in Kuwait. The airlift mission itself is expected to end in mid-December, Kyodo said.