The four were killed while travelling in a convoy about 300 kilometres north of Baghdad, Foreign Minister Alexander Downer said.
The 34-year-old Australian was working for a private security firm, he said.
"The convoy was hit by what they call an improvised explosive device which was hidden in a culvert," Mr Downer said.
The man's name has not been released and there are no further details of the attack.
The man was the sixth Australian killed in Iraq since US-led forces invaded the country and toppled Saddam Hussein's government in March 2003.