In his televised address, the prime minister said that amnesty would be granted only to those who were not involved in killing Iraqi forces.
The prime minister also urged Parliament to move forward with government formation at next week's session.
The newly elected Iraqi Parliament failed to muster a quorum at its first session on Tuesday, delaying a crucial opportunity for the country to form an inclusive new government.
Iraqi leaders, along with U.S. President Barack Obama and Secretary of State John Kerry, have championed a two-track approach in response to the crisis, militarily and politically: fight ISIS and form an inclusive new government in line with Iraq's constitutional mandates.
According to Iraq's constitution, Parliament must select a prime minister within 75 days of its first session.