In a statement sent to Aljazeera.net, the armed group said it named the missile Abeer after Abeer Mahmoud al-Janabi, the Iraqi teenager who was raped and killed in Mahmoudiya by US soldiers.
The group vowed to take revenge on "her killers".
According to the statement, the missile can carry a 20kg warhead as far as 20km.
US media outlets reported last month that US officials and members of the Islamic Army met in Amman, Jordan, and held secret talks.
The Islamic Army denied the reports and said in the statement that such talks never happened; however, the statement did not close the door on the possibilty of negotiations in the future.
The statement which was sent by email said: "We do not have a problem with negotiations in principle, but there are things that the US occupation should carry out before we sit down with them for negotiations.
"The US government must instruct its forces to withdraw from Iraq... To acknowledge the Iraqi resistance as the sole legitimate representative of Iraqi people."
Mounzer Sleiman, a Washington-based military analyst, said: "The missile does not enjoy significant capabilities; however, it does deliver a serious message.
"The missile will allow the resistance fighters to perform attacks miles away from the target, which is safer for them.
"Also, the video shows that they depended on domestic capabilities, which implies the possibility of further enhancement to the missile and the launching technique.
"Basically, if they did this, that means they will manufacture a launching battery soon."