The four-square-mile (10-square-kilometer) International Zone of Baghdad was already the seat of government power under former president Saddam Hussein and became known as the Green Zone after the 2003 US-led invasion.
"We have repeated voiced our concerns over the easing of these restrictions," State Department spokesman Mark Toner told reporters.
"We're obviously monitoring the security conditions very closely as this easing takes place, these actions take place, and are going to continue to adjust our security posture as needed."
It offers limited access to the vast area, with most streets still requiring a special badge, but it is likely to be popular nonetheless and ease traffic congestion.
Toner said the Iraqi authorities had kept the US government informed throughout the process as they prepared to reopen the Green Zone.
US troops withdrew from Baghdad in late 2011, but the US Embassy and travel by US officials are still under heavy security provided by American armed forces.