Iraqi forces have started an offensive to "liberate" the western border region of al-Qaim and Rawa, Islamic State's last stronghold in the country, near the border with Syria, Prime Minister Haider al-Abadi says.
IS also holds parts of the Syrian side of the border but the area under its control is shrinking as the militants retreat in the face of two sets of hostile forces - a US-backed, Kurdish-led coalition and Syrian government troops with foreign Shi'ite militias backed by Iran and Russia.
"Daeshis have no option but to die or surrender," Mr al-Abadi said in a statement, using an Arabic acronym for followers of Islamic State.
"The legions of heroism and sacrifice are moving to eliminate the last bastion of terrorism in Iraq.
"Our people are with you. Right is on your side. Move ahead and victory is your ally."
The latest onslaught on Islamic State militants is being supported by a US-led air alliance, some Iraqi media reported.
Many IS hardliners are believed to have fled to al-Qaim under pressure from recent government campaigns in northern Iraq.
In recent months, Islamic State has suffered military setbacks and lost ground in Iraq.
Mr al-Abadi announced this month that Baghdad had driven IS from the town of Hawija, the radical group's last foothold in the north of the country.
IS's self-declared cross-border caliphate effectively collapsed in July, when US-backed Iraqi forces captured Mosul, the group's de facto capital in Iraq, in a gruelling battle that lasted nine months.