Prime Minister Haider al-Abadi, standing alone on a reviewing stand, saluted the parade as fighter-jets, including U.S.-made F-16s, screamed over the city. Transport aircraft and helicopters also staged fly-overs.
Hundreds of troops and policemen locked down the central Baghdad area for the parade, which featured artillery, tanks and rocket launchers. Clad in black fatigues and matching ski masks, members of the elite counterterrorism force took part in the parade, as well as Iraqi special forces.
The celebration came on the heels of last month's retaking of the city of Fallujah from IS and ahead of an expected assault on Mosul, the last major Iraqi city still under IS control.
Defence Minister Khaled al-Obeidi boasted to reporters that weapons shown at the parade were only a "small part" of the military's arsenal.
"We will surprise Daesh with new weapons" in the battle for Mosul, he vowed, using the Arabic acronym for the Sunni militant group.