Prime Minister Jacinda Ardern confirmed that Cabinet has decided to end New Zealand Defence Force troop deployment in Iraq in June next year.
The deployment in Camp Taji will scale down to 75 troops from July and to 45 troops in January before the mission ends in June.
Up to 95 Kiwi troops have been stationed at Camp Taji since February 2015, training Iraqi Security Forces as part of the Building Partner Capacity mission.
"When it comes to Iraq, it's time to go." Ardern said.
Ardern said more than 44,000 ISF personnel have been trained at Taji since New Zealand was deployed as part of the multinational Defeat-Isis Coalition.
"Four years ago New Zealand made a commitment to the Iraqi Government and to the Coalition to train the ISF at Taji and lift their capability to defeat and prevent the resurgence of Isis," Ardern said.
"Over the next 12 months, New Zealand will be able to wind down and conclude that commitment."
But New Zealand will however increase its stabilisation funding to Iraq to about $3 million a year for the next three years - from $2.4m in 2018-19 - to help communities recover and rebuild after the conflict with Isis.
The money will come from within MFat's overseas aid and development fund, and will contribute to what has been estimated to be a US$87 billion rebuild of Iraq.
Ardern said she had spoken to Australian Prime Minister Scott Morison who had reacted positively to the news.
Ardern said when she came into Government, she had to honour the commitment that had been made to the Iraqi Government.
Defence Minister Ron Mark said he was proud that New Zealand can take a leading role in female leadership in the region.
He said the Government has decided what is best for New Zealanders.
Mark said the training mission is nearing an end and "now it's about mentoring and training the trainers".
He said the Government had conducted a carefully planned exit strategy.
Ardern said she was proud of the work Kiwi servicemen and women do overseas – "they serve us incredibly well".
She would not comment on whether or not it was the right decision to send Kiwi troops in the first place.
Asked if Australia was also pulling out of Iraq, Ardern said it was not for her to announce Australia's long-term commitment to Iraq.
In the 2019 Budget, just under $60 million was allocated to operations contributing to New Zealand's security, stability and interests.
This is described as: "The employment of New Zealand's Armed Forces overseas at the Government's direction."
But just over $26 million was allocated to the same Budget line in the 2019/20 financial year.
The mandate for the joint training mission with Australia, based at Taji camp, was meant to expire in November last year.
But two months before, the Government announced it would extend its deployment in Iraq - until June this year.
"The Government has weighed a number of factors, including carefully considering the risks to our servicemen and women based on advice from the New Zealand Defence Force," Ardern said at the time.
Nato this year asked New Zealand to join its new training mission in Iraq.
At a joint press conference at the time, Nato Secretary-General Jens Stoltenberg said Nato had launched a new training mission in Iraq: "We will of course welcome contributions from New Zealand to that training mission."
But Ardern said she did not give him any commitment and would need to discuss the idea with Cabinet colleagues, but noted that NZ troops were already in Iraq.
When in Opposition, Labour was against sending troops to Iraq and wanted to bring them home.
"Labour's position is clear: we should not send troops to Iraq," then Labour leader Andrew Little said in early 2015.
Where NZ troops are stationed:
Iraq: 121 personnel
Egypt: 28 personnel
Afghanistan: 13 personnel
South Korea: Six personnel
Lebanon: Eight personnel
South Sudan: Four personnel