Eriksson reportedly met with Iraq FA officials in Istanbul last week and enjoyed "positive talks".
Eriksson, who parted with Chinese club Shenzhen in June last year, is keen to return to international management.
The 70-year-old managed England between 2001 and 2006, taking them to the World Cup quarter-finals on two occasions.
Eriksson later went on to manage Mexico and the Ivory Coast.
Iraq are currently 89th in FIFA's world rankings and missed out on qualification for this year's World Cup in Russia.
They play Palestine on August 4 before starting their Asian Cup group stage campaign against Vietnam on January 8