The resolution was passed with 86-1 vote following a request from President Ilkham Aliyev.
"The request from the president came with the expiration of a five-year mandate on the presence of the Azerbaijani peacekeeping contingent in Iraq," said Aydyn Mirzazade, deputy head of the parliamentary commission on defense and security.
The former Soviet republic has been deploying 150 peacekeepers to Iraq since May 2003.
The troops are currently protecting a hydroelectric power station in the town of Al-Hadida, which supplies Baghdad with half of its electricity.
On June 28, the Defense Ministry announced that an Azerbaijani peacekeeper in Iraq was killed in the line of duty, the only death since 2003.
There are also 90 Azerbaijani peacekeepers serving in Afghanistan as part of the International Security Assistance Force (ISAF), a NATO-led security and development mission in the country.