Iran's chief national security envoy Ali Larijani is to visit the Iraqi capital Baghdad for talks.
The visit comes as Tehran says it is looking favorably at participating in a key conference on tackling the violence in Iraq.
A spokesman said Iran would decide on Sunday or Monday whether to take part in the conference, to be held in Egypt.
On Saturday, a car bomb killed 55 people in Karbala, Iraq, home to two of Shia Islam's holiest shrines.
Reports say the bomb went off on a busy street as people headed to pray.
The blast is the second major attack in Karbala this month. Sunni militants are suspected of carrying out the attacks.
Iran has close ties with Shias in Iraq, and has been accused by the United States of arming and training Shia militants for sectarian conflict with Sunnis.
'No strings'
Mr Larijani is expected to discuss the Iraq conference, to be held in the Egyptian resort of Sharm el-Sheikh, Iranian Foreign Ministry spokesman Mohammad Ali Hosseini said.
"Taking into account the moves of the Iraqi officials, the Iranian officials are following this question positively and our position will be announced today or tomorrow," he said, according to the AFP news agency.
He said Tehran would no longer tie attendance to the summit to any other issue, such as the five Iranians still being held by the US in Baghdad.
Iraqi Foreign Minister Hoshyar Zebari failed to win a clear pledge from Iran that it would attend the conference following a decision to include the US and other world powers as well as Iraq's neighbours.
The BBC's Frances Harrison in Tehran says that for Iran, the issue of its attendance is not just about the future of Iraq, but whether there is any chance of starting a dialogue with the US.
One Iraqi diplomat described this as a critical time for Iran, a possible turning point in its deteriorating relations with the outside world.
It is a chance for Iran to show it is serious about stabilizing Iraq, contrary to US and British allegations that Tehran is arming and training Iraqi insurgents, our correspondent says.
After a meeting last week with Mr Larijani, EU foreign policy chief Javier Solana said he believed without hesitation that Iran was ready to talk to the US, and urged Washington to engage with Teheran.
Photo caption
Iraqi Foreign Minister Hoshyar Zebari (L) and Iranian president Mahmoud Ahmadinejad (R)