Hagel, who announced his resignation under pressure in November, told CNN all options must be considered in Iraq, including sending troops for non-combat roles such as gathering intelligence and locating ISIS targets.
"I think it may require a forward deployment of some of our troops ...," he said. "I would say we're not there yet. Whether we get there or not, I don't know."
Hagel's comments echoed testimony by General Martin Dempsey, chairman of the Joint Chiefs of Staff, to Congress last fall when he said U.S. troops might have to take a larger role on the ground in Iraq.
Such a deployment would be in addition to the 4,500 U.S. troops already committed to training and advising roles in Iraq.
Hagel also said he had conflicts with White House officials on releasing prisoners from the U.S. detention facility in Guantanamo Bay, Cuba.
As secretary of defense, Hagel authorized which prisoners would be released and when. He told CNN that the White House did not agree with his cautious approach, saying there were disagreements on "the pace of the releases."
Asked by CNN if he had been pressured, Hagel said, "we've had a lot of conversations" with the White House and Congress on the releases.