Such an act of desecration of the Muslim holy book could inflame anger against the U.S. military presence in Iraq.
The U.S. military said Iraqi police found the Koran on May 11 at a firing range in Radwaniyah village near Baghdad.
Colonel Bill Buckner, a U.S. military spokesman, said the Koran was marked with bullet holes and also had graffiti scrawled inside the cover. It was not immediately clear if the Koran had been used for target practice.
"Coalition commanders have briefed local leaders on the results of the investigation and expressed their deep regret," Buckner said in a statement.
"They have also undertaken disciplinary action against the soldier who was involved and he has been removed from Iraq."
In his statement, Buckner stressed that the U.S. military respected Islam and the Koran.