Arnett, on NBC's "Today" show on Monday, said he was sorry for his statement but added, "I said over the weekend what we all know about the war."
"I want to apologize to the American people for clearly making a misjudgment," Arnett said.
NBC had defended him on Sunday, saying he had given the interview as a professional courtesy and that his remarks were analytical in nature. But by Monday morning the network switched course and, after Arnett spoke with NBC News President Neal Shapiro, said it would no longer work with Arnett.
"It was wrong for Mr. Arnett to grant an interview to state-controlled Iraqi TV, especially at a time of war," NBC spokeswoman Allison Gollust said. "And it was wrong for him to discuss his personal observations and opinions in that interview."
Arnett, who won a Pulitzer Prize reporting in Vietnam for The Associated Press, garnered much of his prominence from covering the 1991 Gulf War for CNN. One of the few American television reporters left in Baghdad, his reports were frequently aired on NBC and its cable sisters, MSNBC and CNBC.
The interview aired Sunday could make Arnett a target of the war's supporters. The first Bush administration was unhappy with Arnett's reporting in 1991 for CNN, suggesting he had become a conveyor of propaganda.
He was denounced for his reporting about an allied bombing of a baby milk factory in Baghdad that the military said was a biological weapons plant. The American military responded vigorously to the suggestion it had targeted a civilian facility, but Arnett stood by his reporting that the plant's sole purpose was to make baby formula.
In the interview, Arnett said his Iraqi friends tell him there is a growing sense of nationalism and resistance to what the United States and Britain are doing.
He said the United States is reappraising the battlefield and delaying the war, maybe for a week, "and rewriting the war plan. The first war plan has failed because of Iraqi resistance. Now they are trying to write another war plan."
"Clearly, the American war plans misjudged the determination of the Iraqi forces," Arnett said during the interview broadcast by Iraq's satellite television station and monitored by The Associated Press in Egypt.
Arnett said it is clear that within the United States there is growing opposition to the war and a growing challenge to U.S. President George W. Bush about the war's conduct.
"Our reports about civilian casualties here, about the resistance of the Iraqi forces, are going back to the United States," he said. "It helps those who oppose the war when you challenge the policy to develop their arguments."
The interview was broadcast in English and translated by a green military uniform-wearing Iraqi anchor.
Arnett, from New Zealand, was the on-air reporter of the 1998 CNN report that accused American forces of using sarin gas on a Laotian village in 1970 to kill U.S. defectors. Two CNN employees were sacked and Arnett was reprimanded over the report, which the station later retracted. Arnett ultimately left the network.
He went to Iraq this year not as an NBC News reporter but as an employee of the MSNBC show, "National Geographic Explorer." When other NBC reporters left Baghdad for safety reasons, the network began airing his reports.
In the April 5 issue of TV Guide magazine, Arnett said he felt he had found redemption reporting on the current war.
"I was furious with (CNN founder) Ted Turner and (then-CNN chairman) Tom Johnson when they threw me to the wolves after I made them billions risking my life to cover the first Gulf War," Arnett told TV Guide.
"Now (Turner and Johnson) are gone, the Iraqis have thrown the CNN crew out of Baghdad, and I'm still here," he said. "Any satisfaction in that? Ha, ha, ha, ha."
He said the Iraqis allowed him to stay in Baghdad because they respect him.
"The Iraqis have let me stay because they see me as a fellow warrior," Arnett said. "They know I might not agree with them, but I've got their respect."