Col. Jalal Sabri said the Americans left the station Friday morning. The U.S. military would not confirm his account.
In new violence, the military says insurgents fired two mortar rounds into the U.S. base in the troubled western city of Ramadi. No injuries are reported. It was the seventh attack on the base in the last 10 days.
One Iraqi was shot in the neck and another in the abdomen when troops opened fire after a grenade attack on a military convoy on a road leading to the Baghdad airport.
Also, a young Iraqi girl suffered shrapnel wounds during a firefight between U.S. forces and suspected militants near a city about 55 miles north of Baghdad.
In other developments:
Police in Fallujah said they were willing to work with the Americans, but did not want them using the station as a base, fearing it would make the Iraqi officers the target of pro-Saddam insurgents.
"We feel more comfortable because of this withdrawal. We can solve the problems here better than the Americans and communicate better with the people," Sabri said. "We have told the Americans many times that we have the capability. We asked them to give us a chance and see our work. If they don't like how we perform, they can come back."
Several dozen Iraqi police, most wearing new uniforms provided by the U.S. military, marched on the mayor's office Thursday in Fallujah saying they would quit their posts if the American soldiers continued to use their station as a base.
Lt. Gen. Ricardo Sanchez, commander of U.S. ground forces in Iraq, had said Thursday that American forces would not leave the police station. He said that if the Iraqis follow through with their threat, "we'll find some more" police to patrol the city.
The fears of the Fallujah police are not without foundation.
Fallujah has seen several deadly attacks on American and Iraqi forces since U.S. troops killed 20 protesters in late April.
Insurgents fired two rocket-propelled grenades at American troops in the city Wednesday, causing no casualties. And an explosion Saturday at a police graduation ceremony in Ramadi, 28 miles west of Fallujah, killed seven U.S.-trained recruits.
Fallujah residents said they were pleased with the Americans decision, but would have preferred a complete withdrawal from their city.
"We are happy they left the station, but we will be happier if they leave the entire town." said Ziad Khalaf, a shopkeeper near the police station. "Nobody wants them here because they are occupiers and infidels."
Attacks by pro-Saddam Hussein insurgents in recent weeks have threatened to drag Iraq's American and British occupiers into a military and political quagmire. The U.S. military insists the resistance does not amount to a full-fledged guerrilla war, and say they have no evidence it is being coordinated on a nationwide level.
Most of the attacks have taken place in an area north and west of Baghdad called the "Sunni Triangle," a region known as a stronghold of Saddam supporters, although many residents deny that the former dictator, also a Sunni Muslim, still has followers among them. Fallujah, Ramadi and Baqouba are all within the triangle.
In Baghdad, meanwhile, the U.S. military handed out hundreds of combat infantry badges to soldiers who took part in the fight for Baghdad, the first time since the Korean War that the medals have been presented to American reservists.