The group is considered extremely dangerous and is accused of carrying out several car bomb attacks across Basra late last year wounding and killing dozens of Iraqi civilians, Iran's state-supported Press TV reported.
"Twelve members of al-Qaeda escaped in the early hours of the morning from a prison in the center of Basra," an Iraqi police officer said Friday.
The suspects had yet to stand trial.
The prison is located about 400 miles south of Baghdad. It was formerly a presidential palace. The report provided no details on how the men escaped.
Opponents of the U.S. military presence in Iraq blame Americans for helping the prisoners escape and said the escapees will escalate violence in the country, creating a situation which the U.S. can use as a pretext to extend its stay, the report said.
Security officials said special teams from the army and police are conducting a large manhunt to track down the fugitives.