"In the coming days of this month, the security of the province will be handed over to the Iraqi forces by the Italians," Aziz Kadhim Alwa, head of the security committee of the province, said.
Alwa said the decision was taken after Italians said Iraqi forces were capable of handling the "province's security after training by the coalition troops".
At least 1,600 Italian troops are currently serving in southern Iraq.
Romano Prodi, the Italian prime minister, has said that the entire Italian contingent - once the fourth largest in Iraq - will be withdrawn by the end of the year.
Major Charlie Burbridge, spokesman for the multinational force in Iraq, confirmed that Iraqi forces would take over the whole province.
"At the moment the Italians are in charge of security for the entire province of Dhi Qar, but when the transfer occurs it will also be for the entire province," Burbridge said, without putting a date on the handover.
Dhi Qar will be the second province whose security is completely controlled by Iraqi forces after authority for Muthanna was transferred last month.
Security concerns continue across the rest of the country.
Iraqi authorities in Mosul have lifted a partial curfew and arrested 62 suspects after heavy fighting between security forces and insurgents.
Police estimated that 20 fighters were killed in the clash on Friday but only four bodies have been found. The fighting began after a car bomb killed a police colonel and three other policemen.
Elsewhere, armed men in Samarra ambushed a convoy of Iraqi trucks carrying food, killing two drivers and setting their trucks on fire, police said.
A sniper also shot dead a government security guard in southern Baghdad.
Police said they had found 12 bodies around the capital, including the body of a woman from the mainly Shia district of Shula in northwestern Baghdad. In Suwayra four bodies were retrieved from the river Tigris. All had been handcuffed, blindfolded and shot.