Enforcement took effect when the law was published in Iraq's official gazette on Feb. 20, seven years after its passage by parliament. No official reason for the delay has been given, but analysts said religious parties exert more influence in the current coalition government than recent predecessors.
Under the law, imported alcoholic beverages are prohibited and cannot be sold in local markets, or replaced by domestically manufactured versions.
Border crossings and airport authorities have been ordered to confiscate any alcoholic drinks in the possession of travellers, according to a government document seen by Reuters.
But despite the ban, liquor stores around the capital Baghdad and in some provinces remain open for business with proprietors telling Reuters that they had not been officially informed that they must stop trading.
Iraqi government officials did not immediately respond to Reuters requests for comment.
Iraq is a conservative, mainly Muslim society where most men and women eschew alcohol, which is proscribed under Islamic religious law, but it is not an Islamic state, critics of the alcohol ban say.
Licenses to sell alcohol have only been issued to non-Muslims in Iraq and, while drinking in public is not prohibited, it is frowned upon. In the capital Baghdad, it is not unusual to see youths drinking on the banks of the Tigris river.
Aswan al-Kildani, a lawmaker from Iraq’s Christian minority, said the ban would run against freedoms guaranteed in Iraq's democratic constitution, and that he had filed a challenge in federal court.
Some Iraqis worry Iraq will become an Islamic republic, like neighbouring Iran.
"Iraq is not an Islamic state and there are different religions and sects. Some religions allow drinking alcohol and the government cannot impose a certain opinion or an ideology on all others," said Baghdad-based political analyst Ali Sahib.
Ending a year of deadlock, the largest parliamentary bloc known as the Coordination Framework, an alliance of Iran-aligned Shi'ite Muslim political factions, managed to form a government in October last year.
Shi’ite religious groups have dominated parliament since the 2003 U.S. invasion that toppled the secular regime of dictator Saddam Hussein.
Still, Iraq’s stance on alcohol has long been seen as relatively liberal in the Islamic world compared with neighbours such as Saudi Arabia and Kuwait, where possession of alcohol is outlawed.