But doubts emerged on social media about the basis for the report. One document posted on Twitter suggested it may be a year old and have been issued by the Islamic State of Iraq and Levant, the group's previous name.
Other Internet comments, including from Middle East analysts, questioned whether the order fit with the cultural traditions of the region.
A U.N. spokesman in Geneva said that they were seeking clarity and trying to establish the facts.
Such a "fatwa" issued by the Sunni Muslim fighters would potentially affect 4 million women and girls, U.N. resident and humanitarian coordinator in Iraq Jacqueline Badcock told reporters in Geneva by videolink from Arbil.
"We have current reports of imposition of a directive that all female girl children and women up to the age of 49 must be circumcised. This is something very new for Iraq, particularly in this area, and is of grave concern and does need to be addressed," Badcock said.
"This is not the will of Iraqi people, or the women of Iraq in these vulnerable areas covered by the terrorists," she added.
There was no immediate comment from Islamic State which has led an offensive through northern and western Iraq.
The world body has "zero contact" with Islamic State, but works through tribal leaders in the affected areas, Badcock said. "I can't give you any more details until we have been on the ground to get information," she said of the directive.
FGM, the partial or total removal of external female genitalia, is a tradition practised widely in many African and Muslim countries and often justified as a means of suppressing a woman's sexual desire to prevent "immoral" behaviour.
Worldwide, more than 130 million girls and women have undergone FGM and more than 700 million women alive today were children when they were married.
The practice of FGM previously occurred only in isolated pockets of Iraq, mainly Kurdistan, according to Badcock.
Mosul city currently has some two million people, more than half of whom are women as there are many female-headed households in the area, she said. Several more million people live in surrounding areas, she added.
"There are reports of rapes of women, of forced marriages," Badcock added.