U.S. civilian administrator in Iraq Paul Bremer handed legal documents transferring sovereignty and formally ending 14 months of occupation to Iraqi Chief Justice Midhat al-Mahmoudi in a brief ceremony attended by a half dozen coalition and Iraqi officials in Baghdad, the Associated Press reported.
Following the low-key ceremony, Bremer and members of his staff left the country. He took charge in Iraq about a year ago.
An unnamed senior administration official said interim Iraqi Prime Minister Iyad Allawi believed the early handover of power would help him face the security threat posed by insurgents, according to the AP.
In recent weeks, militants have conducted a series of car bombings, kidnappings and other attacks designed to disrupt the transfer.
Later Monday, interim Iraqi President Ghazi Mashal Ajil al-Yawer, Allawi and other members of the temporary government were officially sworn in.
"Before us is a challenge and a burden and we ask God almighty to give us the patience and guide us to take this country whose people deserves all goodness," said al-Yawer, Reuters reported. "May God protect Iraq and its citizens."
The interim government will be in power for seven months with elections taking place no later than Jan. 31, according to a U.N. Security Council resolution.
Along with preparing for the election, the Iraqi government will handle day-to-day running of the country and work with the U.S.-led multinational force, which is responsible for security.
The government will not be able to amend the Transitional Administrative Law, or interim constitution.
President Bush was in a NATO meeting with other world leaders in Istanbul, Turkey, at the time of the transfer, and reportedly whispered a comment to British Prime Minister Tony Blair and shook his hand.
The president was told Sunday that the Allawi government was ready to take power early.