Brigadier General Yahya Rasool, spokesman for the Joint Military Command, said forces retook several villages on the outskirts of the town of Makhmour, east of Mosul, on Thursday morning.
It's understood a US-led international coalition is providing air support.
The operation is said to be complex and taxing and it's unknown just how long it could take.
Mosul is Iraq's second-largest city and fell to Islamic State during the militants' onslaught in June 2014.
In the process of the takeover around 100,000 Christians fled the city.
Mosul is now the largest city in IS's self-declared caliphate.