Iran reopened its border with Iraq on Tuesday, shortly after Iraqi Shiite cleric Moqtada Al Sadr ordered his followers to end their protests, state media reported.
Millions of Iranians travel to the Iraqi city of Kerbala every year for the ritual of Arbaeen, which marks the end of a 40-day mourning period for the grandson of the Prophet Mohammad, Imam Hussein.
This year, Arbaeen falls on September 16 and 17.
"As security and calm have been restored in Iraq, all borders are open now," state TV quoted an Iranian official as saying.
Earlier, state TV said Iran had halted all flights to Iraq "until further notice because of the ongoing unrest".
"We are trying to arrange an emergency flight to bring back Iranians from Iraq and Baghdad who are currently at the airport. We hope to evacuate them today," state TV quoted a senior aviation authority as saying.
Mr Al Sadr called on his supporters to withdraw from the streets of central Baghdad on Tuesday, easing a confrontation which led to the deadliest violence in the Iraqi capital in years.
Apologising to Iraqis after 22 people were killed in clashes between an armed group loyal to him and rival Shiite Muslim factions backed by Iran, Mr Al Sadr condemned the fighting and gave his followers one hour to disperse.
"This is not a revolution because it has lost its peaceful character," the former anti-US insurgent leader said in a televised address. "The spilling of Iraqi blood is forbidden."
As the deadline passed at about 2pm, his followers could be seen beginning to leave the area in the fortified Green Zone in central Baghdad where government offices are located and where they had occupied parliament for weeks.
Monday's clashes between rival factions of Iraq's Shiite Muslim majority follow 10 months of political deadlock since Iraq's October parliamentary election, which have raised fears of escalating unrest.
Mr Al Sadr emerged as the main winner in the election but failed in his efforts to form a government with Sunni Muslim Arab and Kurdish parties, excluding the Iran-backed Shiite groups.
This week's violence erupted after Mr Al Sadr said he was withdrawing from all political activity, a decision he said was prompted by the failure of other Shiite leaders and parties to reform a corrupt and decaying governing system.
An Iraqi government official, speaking shortly before Mr Al Sadr's address, said authorities could not impose control on the rival armed groups.
"The government is powerless to stop this, because the military is divided into (Iran) loyalists and Sadrists as well," the official said.