The head of Iran's Revolutionary Guard Corps' foreign operations arm, was carried out by a drone.
The mission was conducted "at the direction of" President Donald Trump, the Pentagon said.
Security sources said 10 people were killed in the strike that hit two vehicles on a road leading to Baghdad international airport.
Soleimani -- who was considered one of Iran's most powerful figures -- was traveling in one of those vehicles.
Abu Mahdi al-Muhandis -- the deputy chief of the Iraqi, largely pro-Iran, paramilitary force Hashed al-Shaabi -- was also killed.
The method used to take out key military figures is more akin to the modus operandi of the Israeli army than US forces, which typically organize their special forces with precision when they seek to take out highly placed figures.
Examples include the raid that killed Osama bin Laden or, more recently, former Islamic State leader Abu Bakr al-Baghdadi.
The timing of the operation
The United States has closely followed Soleimani's movements over the months before eventually commencing the operation. However, many wonder the timing of the killing.
The Pentagon said the general had been "actively developing plans to attack American diplomats and service members in Iraq and throughout the region."
Secretary of State Mike Pompeo said Soleimani was planning a "big action" that would have "put dozens if not hundreds of American lives at risk."
"We know it was imminent," Pompeo told CNN. "This was an intelligence-based assessment that drove our decision-making process."
Retaliation and sanctions!
World oil prices jumped by more than four per cent following Soleimani's death, on market fears the killing will crank up tensions in the region.
Trump, in a nationally televised address from the White House, said that these missile attacks had not harmed any US troops and the damage was minimal, an outcome he said showed Tehran wanted to de-escalate a standoff.
"All of our soldiers are safe and only minimal damage was sustained at our military bases. Our great American forces are prepared for anything. Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world. No American or Iraqi lives were lost," Trump said.
"The US Administration will impose new sanctions on Iran in response to the attack," Trump said.
However, the tensions continue to remain high between the United States and Iran.
What security measures?
The US has sent more than 14,000 troops to the region as reinforcements over recent months.
Washington announced 500 more would be sent after a pro-Iranian mob laid siege to its embassy in Baghdad this week.
And on Friday, a Pentagon official said another 3,000 to 3,500 troops would be deployed to the Middle East.
The US currently has 5,200 soldiers deployed in Iraq, officially to assist and train its army and ensure Islamic State does not reemerge as a force.
The State Department has called on US citizens to leave Iraq as quickly as possible.