Though he ruled out any future need for Western ground troops, Petraeus said a Western victory over the Islamic extremists in Iraq and Syria could take years.
Petraeus offered that view on Wednesday outside a meeting where he spoke about a U.S. think-tank report he co-authored about Canada-U.S.-Mexico relations.
Petraeus said he's optimistic because of the recent military gains by Iraqi ground forces in northern Iraq and near Baghdad.
Iraqi army and police with help from Shiite and Sunni militias "have not only halted the Islamic State but reversed their gains," said Petraeus, a former director of the Central Intelligence Agency and now the chairman of a major global investment firm.
"This is, however, going to play out over months and most likely years," he added.
"It's not going to be rapid. But I think that the momentum of the Islamic State has been halted, by and large, and that the initiation of a gradual process of taking back Iraqi areas, controlled by ISIL has begun."
Speaking to a small group of reporters, Petraeus said it was unlikely that U.S. ground troops — or those of coalition partners such as Canada — would be needed.
"The combat forces on the ground have to be Iraqi. And various political initiatives that support that, including political reconciliation between Baghdad and the Sunni Arab communities of Iraq that were alienated under the previous prime minister, those actions also have to be Iraqi."
Petraeus spoke as Canadian jet fighters bombed an Islamic State target in northern Iraq for the second time in two days.
Defence Minister Rob Nicholson said two CF-18s conducted a strike early Wednesday on an extremist fighting position located near Kirkuk, about 280 kilometres north of Baghdad.
The jets dropped two 900-kilogram bombs on what appeared to be fortified positions.
A military official said there were no civilian casualties and would not speculate on how many extremists might have been killed.
The raid took place at the same time as other allies, notably France, conducted air operations aimed at relieving pressure on Kurdish Peshmerga fighters near the besieged, oil-rich city.
The Islamic State of Iraq and the Levant overran much of the region earlier this year.
Nicholson told the House of Commons on Wednesday that the air campaign has put a significant dent in the ISIL war chest, which he said has been funded by captured oil fields.
"Since the air campaign began, ISIL's refining capacity has been reduced by 11,000 barrels a day," the minister said.
"Let there be no doubt that air strikes have significantly diminished ISIL's capacity to fund its military operation."
However, Petraeus said the previous ISIL gains have "had no appreciable effect on global energy markets."
The state of those markets has been a major preoccupation for the ex-general. The new report that Petraeus co-authored for the U.S. Council on Foreign Relations argues for a co-ordinated energy strategy among the U.S., Canada and Mexico.
Petraeus said the North American continent looks to be headed for energy self-sufficiency, which he said could have enormous geopolitical implications.
But that won't be enough to make any appreciable difference in the immediate future on another conflict — the crisis in eastern Ukraine, where Russian-backed militias have seized territory, he said.
Many analysts point to Russia's dominance as a major supplier of oil and gas to Ukraine and other European countries as underlying source of strength for the Kremlin in its ongoing standoff with the West.
"Although there are lots of small initiatives that can add up, the current situation in which Russia contributes very substantially to the energy needs of Europe overall, particular to certain states, is going to continue to be norm," said Petraeus.
— with files from Murray Brewster