The complex overlooking the Tigris River was built just outside Saddam's hometown of Tikrit in northern Iraq soon after the country's defeat in the 1991 Gulf War over Kuwait.

It served as headquarters to the 42nd Infantry Division, responsible for military operations in north-central Iraq.

Their replacement, the 101st Airborne Division, will be staying at a former Iraqi air base a few kilometres up the road, and local officials will take control of the palace complex.

"This place is the symbol of how one man spent Iraq's wealth," said Major General Joseph Taluto, the outgoing US regional commander. "Now is the time to return it to the people."

The closure of the heavily-fortified base, the 30th to be shut down this year in Iraq, is also designed to concentrate US troops and reduce their visibility and exposure to attack.

US soldiers Tuesday packed their bags, emptied the garbage, rolled up cables and took some final snapshots of the complex, which comprises 136 buildings, including 18 palaces.

"We've maintained the buildings," said Taludo, even though "it's not the greatest of constructions".

Taludo himself worked in one of the palaces, but set up his private quarters in an outside trailer.

The palaces, now mostly empty, have grand marble staircases, huge carved wooden doors and vast rooms with ceilings covered in stucco or coloured arabesque designs.

The departing US troops however say the marble is little more than frosting that masks shoddy brickwork and failing plumbing. Tiles regularly fall from ceilings where massive chandeliers hang.

The main palace was bombed at the start of the US-led invasion in March 2003 and never repaired, though statues of an Assyrian warrior and a modern-day soldier remain.

Saddam kept his movements so secret that few even today know whether he ever spent much time here.

Provincial governor Hamed Humud Shikti said plans are afoot to turn the complex into a tourist or leisure park when he officially takes over.

"First we shall open the gates to allow the people to see the palaces," which have always been off-limits to the public, he said.

Then "as a temporary measure I shall move my office here, along with those of the police chief," he added.

Sergeant Jason Mastroietro, from Albany, New York, stood outside a palace built for Saddam's mother burning documents in a large metal drum.

"These have been very good conditions, considering we're at war," he said.

The palaces, he said, offered safety from mortar attacks and air conditioning during the hot summer.

"We're not roughing it," he added.

The complex is surrounded by watchtowers on one side and the river on the other. It stretches for several kilometres, similar to a large village resort.

Small palaces and large villas are built on small islands on the river or stand atop a bluff, overlooking the Tigris.

One structure built on a large pond has water running under it. Another, amid palm trees, includes a large terrace looking onto a quiet corner of the river, surrounded by bulrushes.

Another resembles a small Chinese tea pavilion on a reflecting pool, while yet another is a swank cave dwelling cut into the side of a cliff.