Steinmeier is due to meet President Jalal Talabani and Prime Minister Nuri al-Maliki during his trip, which comes exactly a week after a surprise mission by French President Nicolas Sarkozy.
"The Iraqi government has achieved important successes in stabilising the country in recent months," Steinmeier told reporters before leaving for Iraq. "My visit shows that we want to support the new Iraq as it moves towards consolidating democracy and the peaceful balance between religion and ethnicity."
"Germany wants to assist Iraq in reconstruction and will further expand its existing engagement."
Steinmeier was also expected to open a German consulate in Arbil, capital of Iraqi Kurdistan in the north of the country, according to the Kurdish press.
It was the first such visit by a German foreign minister since 1987, three years before UN sanctions were slapped on Saddam Hussein's Iraq over its invasion of Kuwait.
German diplomats said in late 2008 that the foreign minister would visit Iraq by the end of March as a sign of support for US President Barack Obama who took office last month after vowing to accelerate a troop withdrawal.
Like France, Germany was an opponent of the US-led invasion of 2003 which toppled Saddam. Steinmeier was chief of staff to then-chancellor Gerhard Schröder when the war broke out.
Maliki, in an interview with Germany's mass-circulation Bild newspaper published on Tuesday, invited German companies to invest in the new Iraq, regardless of their stand on the invasion.
On December 21, Iraq signed a $2-billion contract with the German firm Siemens to build 16 electricity units in five plants with a total capacity of 3,200 megawatts to be installed across the country by spring 2010.
Maliki said Iraq's military capacity had improved to a level that they could handle security on their own. The coalition was now playing a mainly logistical role in support of Iraq's security forces.
Germany's Handelsblatt newspaper, quoting German diplomats, reported in November before a date was set for the visit that Steinmeier would seek to "finally normalise relations with the Iraqi government."
The visit would also "send a signal that the German government supports the Obama policy for the Middle East," the diplomats said.