The 6-square-mile enclave on the Tigris River included the majestic Republican Palace, which housed the American Embassy and other key U.S. and Iraqi bureaucracies and once symbolized Saddam Hussein's firm control of the country.
The walls have been stripped bare and vaults that held U.S. cash and classified documents emptied, The Washington Post said. U.S. officials say they will try to be as inconspicuous as possible. There are still details to be worked out.
The Green Zone transfer is part of a "status of forces" security agreement between the United States and Iraq signed last month.
For many Iraqis, the handover represents a major step toward their gradual reassertion of control of their own affairs.
"On January 1, we are going to control this," an Iraqi soldier manning a Green Zone entry checkpoint said. "The U.S. will be here just as observers. It's a matter of pride."