NATO's top decision-making body, the North Atlantic Council (NAC), adopted a "concept of operations" for the mission, agreed after prolonged negotiations which notably pitted the United States against France and other countries.
The plans were aimed at "substantially enhancing NATO's assistance to the Iraqi interim government with the training of its security forces, as well as the coordination of offers of training and equipment, said a NATO statement.
The mission will be led by US Lieutenant General David Petraeus, who was at the meeting of NATO ambassadors which agreed his appointment and the terms of mission.
Speaking to reporters at NATO headquarters in Brussels, Petraeus said that Iraq was "in a race to develop its security forces in time for the elections" due early next year.
"It's important that this capability be provided to them as quickly as possible," he added.
Asked to describe this task, he said: "It's like trying to repair an aircraft while it's in flight but also while it's being shot at".
He refused to be drawn into numbers, but said the mission would comprise "several hundred trainers".
The NATO mission would be complementary with the Multinational Force. "It's like the software to go with the hardware that the multinational force is already putting in place," he said.
Petraeus is currently commander of the Multinational Force training effort, and will become "dual-hatted" in taking on the running of the NATO mission as well.
Under the plans senior Iraqi officers will be trained in a military academy in the Baghdad region. In all between 200-300 NATO trainers will be deployed, although the number of troops needed to protect the mission has not been set.
NATO has agreed to provide protection for the military academy itself, while the multi-national force in Iraq is to ensure a wider secure environment for the mission.
NATO leaders agreed in principle on the Iraqi training mission at a summit in Istanbul in June, but the alliance has struggled to hammer out the details.
Belgium, France and Germany -- the key opponents of the Iraq conflict, whose resistance plunged NATO into an unprecedented crisis last year -- have notably refused to deploy any troops inside Iraq as part of the training mission.
General James Jones, NATO's supreme allied commander, said last week as many as 3,000 NATO troops could be deployed to Iraq to help train Iraqi security forces.
But NATO officials have since sought to downplay that figure, saying it is far too premature to say exactly how many troops will be needed to protect the training mission.
And a US defense official admitted this week that the mission is not likely to get there until next year -- too late to have an impact on the training of security forces ahead of Iraq's January elections.
"We'd like to see it happen sooner," the official said.