The defeat means that Iran has now lost back-to-back matches in the World Cup Qualifiers having also lost to Bahrain 1-0 last month. Iraq is now top of Group C with 10 points while Iran is third, four points adrift of the Iraqis.
Mohanad Ali was on target for Iraq just 11 minutes into the match but Iran’s Ahmad Nourollahi equalized the match in the 25th minute.
Iraq possessed the ball in the second half and created several goalscoring chances.
In the 81st minute, Iran captain Masoud Shojaei was sent off for receiving the second yellow card.
In the added time, Alaa Abbas, who had replaced Mohanad, headed home from a corner.
Iran had started the campaign with a 2-0 win over Hong Kong and also defeated Cambodia 14-0.
Under leadership of Carlos Queiroz, Iran advanced to the back-to-back FIFA World Cup.