Iraqi government spokesman Ali al-Dabbagh urged Ankara to end the military action - which comes after weeks of mounting cross-border tensions - and use dialogue to solve the rebel issue.
"We feel this issue will not be solved militarily. Any such action is an attack on Iraq's sovereignty," he told AFP.
Around 500 Turkish troops crossed into northern Iraq on Tuesday targeting rebel Kurdistan Workers' Party, or PKK, guerrillas hiding in the mountainous terrain along the border with Turkey.
The ground incursion was the first such operation since tensions between the two neighbors broke out after the rebels ambushed a Turkish military patrol Oct. 21 and killed 12 soldiers.
"We believe Turkey is not going to extend the operation. It is a limited operation," Dabbagh said.
Turkey's military said the incursion had dealt a "heavy blow" to the rebels.
"A small-scale operation conducted by ground troops...dealt a heavy blow" to PKK militants who had tried to infiltrate Turkey overnight, it said on its Web site Tuesday.
Iraqi Kurdish officials from northern Iraq had said Tuesday evening that Ankara had started withdrawing the troops.
But Dabbagh said he didn't know if Turkish forces had withdrawn completely.
"It is difficult to say as the area there is not easy to track," he said.
Turkey didn't indicate how many troops took part in the incursion, which began after the army "received images" of a rebel group attempting to sneak across the border.
Local Iraqi officials said about 500 soldiers crossed into remote areas in northern Iraq and began withdrawing by Tuesday afternoon.
The PKK, listed as a terrorist group by Ankara and much of the international community, has waged a bloody campaign for Kurdish self-rule in southeast Turkey since 1984. The conflict has claimed more than 37,000 lives.
The incursion Tuesday followed Turkish air strikes Sunday on rebel positions in northern Iraq where the PKK is known to have camps.
The Turkish army has voiced determination to continue cross-border operations in line with a parliamentary authorization in October that approved such incursions to end the safe haven the PKK enjoys in northern Iraq