The order comes in the wake of a U.S. judge dismissing criminal charges against five Blackwater guards who were accused in the September 2007 shooting deaths of 17 Iraqis in Baghdad.
It applies to about 250 security contractors who worked for Blackwater in Iraq at the time of the incident, Interior Minister Jawad al-Bolani told The Associated Press.
Some of the guards now work for other security firms in Iraq, while others work for a Blackwater subsidiary, al-Bolani said. He said all "concerned parties" were notified of the order three days ago and now have four days left before they must leave.
Blackwater security contractors were protecting U.S. diplomats when the guards opened fire in Nisoor Square, a crowded Baghdad intersection, on Sept. 16, 2007. Seventeen people were killed, including women and children, in a shooting that inflamed anti-American sentiment in Iraq.
"We want to turn the page," al-Bolani said. "It was a painful experience, and we would like to go forward."
Based in Moyock, N.C., Blackwater is now known as Xe Services, a name change that happened after six of the security firm's guards were charged in the Nisoor Square shootout. At the time, Blackwater was the largest of the State Department's three security contractors working in Iraq.
One of the accused guards pleaded guilty in the case, but a federal judge in Washington threw out charges against the other five in December, rapping the Justice Department for mishandling the evidence.
The legal ruling infuriated Iraqis, with Prime Minister Nouri al-Maliki vowing to seek punishment for the guards.
Last month, U.S. Vice President Joe Biden flew to Baghdad to appease Iraqis with a promise by the Obama administration to appeal the case and bring the guards back to trial.
The shooting further strained relations between the United States and Iraq, leading the parliament in Baghdad to seek new laws that would clear the way for foreign contractors to be prosecuted in Iraqi courts. The U.S. government rejected those demands in the Blackwater case.
In January 2009, the State Department informed Blackwater that it would not renew its contracts to provide security for U.S. diplomats in Iraq because of the Iraqi government's refusal to grant it an operating license.
But last September, the agency said it temporarily extended a contract with a Blackwater subsidiary known as Presidential Airways to provide air support for U.S. diplomats.
The Justice Department now is investigating whether Blackwater tried to bribe Iraqi officials with about $1 million to allow the company to keep working there after the Baghdad shooting, according to U.S. officials close to the probe.