The renovated facility will be called Baghdad's Central Prison because the name Abu Ghraib has left a "bitter feeling inside Iraqis' hearts," deputy Justice Minister Busho Ibrahim said.
Abu Ghraib, which was a torture center under Saddam Hussein, has been closed since 2006.
The prison will house 3,500 inmates when it reopens in mid-February and will have a capacity for about 15,000 by the end of this year, Ibrahim said.
The announcement comes as the US military has begun handing over about 15,000 detainees in its custody to the Iraqis under a new security agreement, prompting concern about Iraq's beleaguered judicial system. The United Nations warned in a recent human rights report about overcrowding and "grave human rights violations" of detainees in Iraqi custody.
"We have crowded prisons and the opening of Baghdad's Central Prison will help ease the problem," Ibrahim said. He said the facility will be operated according to international standards.
Last year, the government said it would turn a section of the 280-acre prison into a museum documenting Hussein's crimes of torture but not the prisoner abuses committed by US guards.
In all, 11 US soldiers were convicted of breaking military laws and five others were disciplined in connection with treatment of prisoners at Abu Ghraib.
The photos taken at the prison brought another serious stain to America's reputation after worldwide protests against the March 2003 invasion. They also discredited Washington's claims that it was trying to build a country based on rule of law and respect for human rights on the wreckage of dictatorship.
American authorities implemented a series of reforms in the aftermath of the Abu Ghraib scandal, although they still faced complaints about prolonged detentions without charges.
Violence has declined dramatically in Iraq but militants continue to stage attacks, with a spate of bombings and assassinations ahead of Jan. 31 provincial elections.
Yesterday, a suicide car bomber struck an Iraqi police patrol in the former insurgent stronghold of Karmah west of Baghdad, killing four people, including a senior officer, and wounding six others, according to police and hospital officials.
