The circumstances of the surrender were not fully disclosed but it marked a rare instance in which an IS fighter voluntarily gave himself up to Iraqi or Kurdish forces in Iraq.
In neighboring Syria, meanwhile, Syrian Kurdish fighters battling the Islamic State, have told The Associated Press that they are seeing an increase in the number of IS members surrendering following recent territorial losses.
Maj Gen Feisal Helkani of the Iraqi Kurdish peshmerga forces, which are playing a key role along with the Iraqi military in battling the extremist IS group, identified the individual who surrendered as Mohammed Jamal Amin.
According to Helkani, Amin was carrying with him a large amount of cash, three cell phones and three forms of identification, including a US driving license. The IS fighter is currently being held by the peshmerga troops for interrogation, Helkani added.
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The Iraqi Kurdish general did not provide further details or a hometown or state for the Palestinian-American.
Last week, Brett McGurk, President Barack Obama's envoy to the US-led coalition fighting the Islamic State group, announced that IS had lost more than 3,000 square kilometers (1,158 square miles) of territory in Syria and more than 600 fighters over the past month.
Local officials in the town of Taza in Iraq's north say a recent attack injured more than 600 people. The attacks follow a string of advances by Iraqi forces backed by US-led airstrikes, including in the western city of Ramadi, which was declared fully "liberated" by Iraqi and US-led coalition officials last month.
IS still controls large swaths of land in Iraq and Syria and has declared an Islamic "caliphate" on the territory it holds. The extremist group also controls Iraq's second largest city, Mosul, as well as the city of Fallujah, 40 miles (65 kilometers) west of Baghdad.