International Development Minister Christian Paradis says the No Lost Generation initiative will help up to 200,000 children whose lives have been disrupted by conflict.
Paradis says the money will help keep the children in school and provide the catch-up education many of them will need.
UNICEF Canada says the government money comes on top of $1.7 million donated by ordinary Canadians to support relief efforts in Iraq.
Paradis said the latest donation brings Canada's total commitment to humanitarian and stabilization efforts in Iraq to $74.25 million.
Paradis says an estimated 1.8 million Iraqis have been displaced by the fighting in that country, the largest such internal displacement in the world.
UNICEF says another 100,000 Syrian children have fled to Iraq, adding to the size of the problem.
"We have to ensure access to education even in the face of conflict," Paradis said.
David Morley, UNICEF Canada’s president and CEO, said Canada's latest donation will help provide critical support for youngsters living in terrible conditions.
"Children are the innocent victims of this crisis and our top priority is to protect their safety and well-being while making sure their futures are not casualties of this conflict," he said.
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