The ban, enforced on Fridays to prevent attacks on mosques during weekly prayers, now covers most of the day.
It comes as two bomb attacks on mosques in Baghdad and the town of Khalis, north of the capital, killed two people and injured at least four others.
Meanwhile, the US military says three people, including a child, have been killed during a raid in Baquba.
The US military said soldiers were searching for what it called senior al-Qaeda in Iraq members. It said two suspected militants were also killed in the raid and 23 others were injured.
In a statement, it said it “regretted” the civilian deaths.
Authorities hope the extended traffic ban in Baghdad will curb violence in the capital which has increased over the past few weeks.
The traffic ban will now end at 1900H (1700 GMT) instead of at 1500H, just two hours before the daily night-time curfew begins.
The BBC’s Jane Peel in Baghdad says after a bloody week with car bombings and sectarian killings in and around the capital, Friday has so far been quieter.
The city is increasingly a dangerous place to live, our correspondent says.
According to official figures, 1,000 bodies have been taken to the city mortuary so far this month, of which 80% are said to be the victims of violence.