The host nation, who also drew 0-0 with South Africa on Thursday, were roundly booed by the 65,000 crowd in Brasilia as they failed to break down a stubborn Iraq side.
Neymar almost scored direct from a corner and Renato Augusto hit the bar with a dipping drive but Brazil could not turn their pressure into goals.
They now face Group A leaders Denmark in their last match on Wednesday needing at least a draw to have any chance of progressing. The Danes beat South Africa 1-0 on Sunday thanks to Roberto Skov's goal.
While Brazil have struggled to hit the target, South Korea and Germany served up a six-goal thriller in Salvador in Group C.
The Koreans, making a record eighth consecutive appearance in the Olympics, took a deserved lead through Hwang Hee-chan in the 25th minute before the Germans equalised through Serge Gnabry eight minutes later.
The Germans went ahead when Davie Selke scored 10 minutes after the break, but that lead lasted only a minute as Son Heung-min scored a lovely solo goal after bamboozling German defenders with some nifty footwork.
Suk Hyun-jun looked like he had given South Korea victory with three minutes to go when he fired home from close range but the Germans grabbed the equaliser deep in stoppage time when Gnabry's free kick was deflected into the net.
South Korea, who beat Fiji 8-0 in their opener, lead the group on goal difference from Mexico, with both teams on four points. Germany have two but face the Fijians in their final game.
Fiji, who have never made the World Cup finals and are playing at their first Olympics, took a shock lead against defending champions Mexico through Roy Krishna after 11 minutes.
However, Erick Gutierrez grabbed three goals in the first 13 minutes of the second half to give Mexico the upper hand before Carlos Salcedo added a fourth in the 67th minute.
Image credit: AFP
Gutierrez then got his fourth goal five minutes later with a delightful chip over the goalkeeper.
In Group B, Umar Sadiq's goal gave Nigeria a 1-0 win over Sweden, and Japan drew 2-2 with Colombia.
Jonathan Calleri got Argentina's winning goal in a 2-1 victory over Algeria in Group D.
Honduras got a perfect start against Portugal when Alberth Elis put them ahead in the first minute but Tobias Figueiredo levelled and Paciencia got the winner for the Europeans.
Portugal have six points from two games with Argentina and Honduras both on three.