Gurdi Gurdev was shot dead when his unit came under fire 45km south of Bulgaria's base in central Iraq on Friday.
Defence Minister Nikolai Svinarov said on Monday that a Bulgarian patrol trying to stop an Iraqi vehicle came under heavy fire from the direction where a US unit was based.
"The result [of the investigation] gives us enough grounds to believe the death of Private Gardi Gardev was caused by friendly fire," he added.
The shooting happened the same day US forces killed an Italian intelligence agent and wounded freed Italian hostage journalist Giuliana Sgrena.
Gardev was the eighth Bulgarian to be killed while serving in Iraq, where the Nato member has 430 troops in the town of Diwaniya serving as part of a multinational contingent under Polish command.
Bulgaria's participation in the US-led military operations in Iraq has sparked heated debate in the Balkan state, where some 75% of the people opposing the war.
This could play a role in the country's parliamentary elections due to be held in June, says analysts.