The paramilitary wing of influential Iraqi cleric Muqtada al Sadr on Monday agreed to disband its forces and hand over its cache of weapons to the Iraqi government, making it the first Shia militia to lay down its arms in the aftermath of Islamic States defeat in the country.

During a televised speech Monday, Mr. al-Sadr called upon the government of Prime Minister Haider al-Abadi allow members of his militia, known as Saraya Al-Salam, to join the Iraqi security forces or take positions within the federal government. He also demanded Baghdad look after the families of the martyrs who were killed during the three-year war against ISIS via compensation and support.

Other Shia paramilitaries, such as the Iranian-backed Harakat Hezbollah al Nujaba, a militia force of roughly 10,000 fighters, vowed last month to turn over any heavy weapons it had to Iraqi security forces once Islamic State had been driven from the country. Despite such promises,...