The new force will consist mostly of Army special operators, US defence officials said.
The remaining troops will be made up of trainers, security forces and maintenance teams for the Apaches, the officials told the AP news agency.
The new Army special operators will serve primarily in advise and assist teams embedded with Iraqi forces.
Previously, US advisers typically worked with Iraqi troops at the headquarters level - away from the front lines.
US forces will now likely be closer to the fight, allowing them to provide more tactical combat advice as the Iraqi units move toward the IS stronghold of Mosul.
The move follows discussions between President Barack Obama, Iraqi leaders and US commanders on the ground in Iraq.
The President's decision authorises the increase of US forces in Iraq from 3,870 to 4,087.
In March, the US deployed a detachment of Marines to Iraq to support operations against Islamic State.
The Iraqi government has been deploying federal forces to northern Iraq to prepare for an offensive against Mosul.
The addition of Apache attack helicopters for the first time will provide forces on the ground with precision fire during the fight.
US officials have been working with Iraqi leaders to negotiate American assistance for the fight against IS.
Iraqi officials have been reluctant to have a large number of US troops in Iraq, but they also need certain capabilities that only American or coalition forces can provide, a US defence official told the AP news agency.
Mr Obama is travelling to Saudi Arabia later this week to talk with Gulf leaders about the fight against the extremist group in Iraq, Syria and other parts of the Middle East.