Top federal and Kurdish security officials agreed in Baghdad on Monday to "activate" coordinating committees between their forces and work to calm the situation in northern Iraq, a statement said.
Tensions are running high in parts of the country's north that the autonomous Kurdistan region wants to incorporate over the strong objections of Baghdad, and military reinforcements have been sent to disputed areas.
Parliament speaker Osama al-Nujaifi has been pushing to resolve the crisis, which he has warned could lead to civil war.
The two sides agreed to continue meeting "and to activate the higher coordinating committees between the (federal) armed forces and the (Kurdish) regional guard forces" known as peshmerga, a statement from military spokesman Colonel Dhia al-Wakil said, without providing details on the committees.
They also agreed to begin "calming the situation and searching for mechanisms to withdraw the units that were mobilised after the crisis to their former locations," the statement said.
The meeting was chaired by national security adviser Falah al-Fayadh and attended by Iraqi General Faruq al-Araji, US Lieutenant General Robert Caslen and delegations from the federal defence ministry and the Kurdistan ministry responsible for the peshmerga forces, it said.
The peshmerga ministry's media office said the Kurdish delegation included top peshmerga officials Jabbar Yawar and Anwar Haj Othman.
Yawar said on Iraqiya state television that "we agreed that we would return the situation as it was before, and God willing, all the forces will return to their original areas".
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He did not provide further details, but did say "we are working on the success of the agreement" and described the meeting as "very good".
Parliament speaker Nujaifi has been holding talks since Wednesday with political leaders in Baghdad and Kurdistan in a bid to reduce tensions.
Earlier on Monday, Kurdistan premier Nechirvan Barzani told a news conference that "Iraq's problems will not be addressed by force" and "will only be addressed by dialogue".
Barzani also said a high-level Kurdish delegation would travel to Baghdad on Tuesday for meetings, and expressed hope Nuajifi's efforts would yield results.
The recent establishment of the Tigris Operations Command, which covers disputed northern territory, drew an angry response from Kurdish leaders who want to incorporate much of the area into their autonomous region.
Kurdistan president Massud Barzani said peshmerga clashed with Iraqi forces in the disputed town of Tuz Khurmatu on November 16, after which he ordered the peshmerga to be in "a highest state of readiness".
Iraqi Prime Minister Nuri al-Maliki's office warned the peshmerga "not to change their positions or approach the (federal) armed forces," and the two sides traded accusations about reinforcements being deployed.
The territory row poses the biggest threat to Iraq's long-term stability, diplomats and officials say. Ties between the two sides are also marred by disputes over oil and power-sharing.