The Pentagon chief will meet with Iraqi leaders and military commanders on Saturday to discuss how the fight against Daesh is going.
This is Carter's third trip to Iraq this year, and he has overseen the steady increase in the number of American troops deployed there.
The trip to Iraq follows a visit to Ankara where Carter met with Turkish leaders on Friday.
"It's the beginning of the campaign.
We do feel positively about how things have started off, particularly with the complicated nature of this operation," a US official told reporters ahead of Carter's trip to Baghdad.
The stop also came two days after the US suffered its first combat death in the Mosul offensive. The service member died of his wounds sustained in a roadside bomb blast.
During his visit to Turkey, Carter expressed his support for a possible Turkish role in the campaign against Daesh and said there was an agreement between Ankara and Baghdad, potentially ending a source of tension.
A massive military operation was launched by Iraqi forces earlier this week to drive out Daesh from the northern city of Mosul, their last stronghold in Iraq.
Currently there are about 5,200 US soldiers in Iraq.
Washington says the troops are providing air support, training and advice to the Iraqi military.
More than 100 of them are embedded with local units involved with the battle for Mosul, advising commanders and calling in targets for airstrikes.
The United States and some of its allies have been carrying out airstrikes in Iraq and Syria since 2014 allegedly targeting Daesh terrorists.
US forces invaded Iraq in 2003 to topple long-time dictator Saddam Hussein but the large-scale military operation deteriorated security in the Arab country and gave birth to various militant groups like Daesh.
Carter also spoke with Turkish leaders about the ongoing effort to secure Turkey's border with Syria.
Turkey has increased military operations against Daesh in Syria.
Ankara has been angered by Washington's support for Kurdish forces battling Daesh in Syria.
Asked about Turkish airstrikes that struck a group of Kurdish fighters allied to a US-backed militia in northern Syria, Carter said he was not certain about what precisely transpired.
There are dozens of US special operations forces in Syria, who are working closely with a collection of various militant groups that are trying to topple the country's legitimate government.
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