Egyptian President Abdel Fattah El Sisi and Iraq's Prime Minister Mohammed Shia Al Sudani discussed ways to save the region from the “grave crises” threatening its security and stability during talks on Tuesday.
Mr Al Sudani visited New Alamein, a coastal city north of Cairo and the summer seat of the government.
“The meeting witnessed an exchange of views on the means to save the region from the grave crises that are shaking it and threatening its stability … they agreed on the necessity of reducing regional escalation,” an Egyptian presidential statement said.
The two leaders also emphasised the need for a ceasefire in Gaza and ending the humanitarian crisis in the sector.
Egypt has attempted, with Qatar and the US, to broker a ceasefire in the 10-month-old war in Gaza as well as a hostage and prisoner swap.
The need for a pause in the Gaza war became more urgent after a rise in regional tensions after the assassination of Hamas's political leader Ismail Haniyeh in Tehran last month. Israel did not comment on the killing, however, it did claim responsibility for the assassination of top Hezbollah commander, Fouad Shukr, in Beirut in July.
Israel and the Iran-backed Hezbollah had their most intense exchange of cross-border hostilities on Sunday, underlining the potential for the Gaza war to grow into a wider conflict.
Iraq is also home to several powerful militias backed by Iran, which have attacked US forces in Iraq and across the region in solidarity with Hamas.
Mr Al Sudani “affirmed Iraq's commitment to co-operation and openness towards Egyptian companies, particularly in the areas of housing, agriculture, and water management,” an official Iraqi statement said.
The Egyptian and Iraqi leaders, it added, had “extensive discussions” in the areas of oil, agriculture, and water management, as well as the trilateral co-operation with Jordan in what is known as The New Levant Initiative to boost mainly commercial co-operation between the three countries.