"We are going to raise our cooperation to the highest level thanks to joint command and training centres included in this agreement," Turkish Foreign Minister Hakan Fidan said after meeting in Ankara with his Iraqi counterpart Fuad Hussein.
He welcomed "Iraq's growing awareness about the PKK".
The Kurdistan Workers' Party, or PKK has been involved in an on-and-off armed insurgency against Turkey since 1984.
Labelled a "terror organisation" by Turkey, the United States and European Union, the PKK has bases in northern Iraq from where it launches attacks into Turkey.
Hussein said the presence of PKK forces in northern Iraq poses "a danger for the Kurdistan region and other Iraqi cities" and poses a threat to Iraqi society.
Iraq's northern Kurdistan region runs along the border with Turkey.
"The Iraqi government has decided to add the PKK to the list of banned parties," he added.
Hussein said that in addition to fighting militant organisations the discussions also touched upon securing their border against smuggling and illegal migration.
The pact follows signs of a thaw in relations between Ankara and Baghdad, which have been strained by a Turkish military operation against the PKK in northern Iraq.
Claiming it needed to secure its border with its southern neighbour, Turkey rolled out Operation Claw-Lock in April 2022.
It involved Ankara attacking the Kurdish group within Iraq.
On July 13, President Recep Tayyip Erdogan announced the operation's imminent end.
Erdogan made his first visit to Baghdad since 2011 in April of this year.
The Turkish foreign ministry said a joint security coordination centre will be created in Baghdad and a joint training and cooperation centre at Bashiqa near the northern Iraqi city of Mosul.
Iraq's Hussein said permanent joint commission would also be set up in Turkey. He said cooperation between the neighbours has "attained a high level" and described it as "a historic breakthrough".
Hussein added that the notion of security also included issues such as trade, energy, transportation, agriculture and water.
The two main rivers passing through Iraq, the Euphrates and Tigris, begin in Turkey. Water has been a recurrent source of tension between the two.
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