The hiring comes two months after Brazilian Jorvan Vieira was fired as coach of the national team. Iraq won the Asian Cup in 2007 but did not advance as far as the final round of World Cup 2010 qualifying in Asia.
Iraq will face Spain, South Africa and New Zealand in the Confederations Cup.
Milutinovic coached five different teams at five consecutive World Cups: Mexico in 1986, Costa Rica in 1990, the USA in 1994, Nigeria in 1998, and China in 2002.
His last two stints with national teams have ended quickly.
BORA'S COACHING CAREER
1977-1981 Pumas UNAM
1987 San Lorenzo (Argentina)
1987 Udinese Calcio (Italy)
1990 Costa Rica
1991-1995 United States