Abstarct: Bilateral trade between Iran and Iraq, as one of the most significant dimensions of regional economic relations, plays a considerable role in strengthening economic cooperation, enhancing economic resilience, and fostering sustainable development in both countries. However, this trade relationship has historically faced fluctuations and instabilities due to the influence of numerous factors such as infrastructure constraints, institutional challenges, economic sanctions, and political shocks. The complex and dynamic nature of these factors indicates that analyzing bilateral trade solely through static and linear approaches cannot provide a comprehensive picture of its long-term behavior. This research employs a System Dynamics approach to dynamically analyze Iran-Iraq bilateral trade and examine the effect of the interaction between infrastructural, institutional, and political factors on its long-term behavior. For this purpose, key variables were first identified baxsed on theoretical foundations and literature review, and the Causal Loop Diagram (CLD) of the system was drawn. Subsequently, the Stock and Flow Diagram was designed and the model was implemented in Vensim software. The volume of bilateral trade, infrastructure capacity, trade facilitation level, and trade stability were considered as the main stock variables of the model. The simulation baxseline year was set to 1403 SH (2024 AD), during which the volume of Iran-Iraq bilateral trade was equivalent to 12 billion dollars. The system's behavior was simulated over a ten-year horizon, and various policy scenarios were examined. The simulation results indicate that improving infrastructure capacities and trade facilitation, through the creation of reinforcing feedback loops, has a positive and cumulative effect on the growth of bilateral trade. Conversely, the intensification of sanctions and political shocks can weaken the trade trend through balancing feedback loops. Furthermore, the model's sensitivity analysis highlights the key role of institutional parameters and trade stability in determining the long-term path of bilateral trade. The findings of this research can serve as an analytical tool for economic policymakers and play a role in designing effective policies for the sustainable development of Iran-Iraq bilateral trade.