Once completed, the $17 billion project known as the "Route of Development" would span the length of the country, stretching 1,200 kilometres (745 miles) from the northern border with Turkey to the Gulf in the south.
Prime Minister Mohamed Shia al-Sudani announced the project during a conference with transport ministry representatives from Iran, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, Syria, Turkey and the United Arab Emirates.
"We see this project as a pillar of a sustainable non-oil economy, a link that serves Iraq's neighbors and the region, and a contribution to economic integration efforts," Sudani said.
While further discussions are required, any country that wishes "will be able to carry out part of the project", the Iraqi parliament's transport committee said, adding the project could be completed in "three to five years".
"The Route of Development will boost interdependence between the countries of the region," Turkey's ambassador to Baghdad Ali Riza Guney said, without elaborating on what role his country would play in the project.
War-ravaged and beset by rampant corruption, oil-rich Iraq suffers from dilapidated infrastructure.
Its roads, riddled with potholes and poorly maintained, are in terrible condition.
Those connecting Baghdad to the north cross areas where sporadic attacks are still carried out by remnants of the Islamic State group.
Sudani has prioritised the reconstruction of the country's road network, along with upgrading its failing electricity infrastructure.