"The results of some sampling have confirmed the use of mustard gas," one source said, asking to remain anonymous.
The news comes amid an investigation by the Iraqi government into the 2015 attacks aided by the Organisation for the Prohibition of Chemical Weapons (OPCW), based in The Hague.
It is also only days after US officials said IS jihadist fighters had the capability to make small quantities of chlorine and mustard gas and had used it in war-torn Syria and Iraq.
The peshmerga ministry said "37 of the rounds released a white dust and black liquid when they exploded. Thirty-five peshmerga fighters were exposed and some were taken for treatment".
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"The results of the tests on blood samples... Reveal traces of mustard gas," the ministry said at the time, but the origin of the suspected gas was unclear.
OPCW spokesman Malik Ellahi confirmed the watchdog had sent a team of experts to help Iraq in its investigation into possible chemical weapons.
"The complete findings and conclusions can be expected to be issued by the government of Iraq together with the OPCW inputs," he said, declining to give further details.
Diplomatic sources told AFP the report was a survey conducted by Baghdad with the OPCW's help.
"The report is still a work in progress," the source told AFP, stressing it would be "logical" for the OPCW to publish it -- but it may well also be released by Baghdad.
US national intelligence director James Clapper last week told a congressional committee that the IS group have used toxic chemicals in Iraq and Syria, including sulphur mustard.
Clapper said it was the first time an extremist group had produced and used a chemical warfare agent in an attack since Japan's Aum Supreme Truth cult carried out a deadly sarin attack during rush hour in the Tokyo subway in 1995.