A U.S. army captain convicted in the shooting death of a wounded Iraqi was dismissed from the forces Friday but won't serve any jail time.

Capt. Rogelio Maynulet, 30, was convicted of assault with intent to commit voluntary manslaughter by a military court in Germany on Thursday. The crime carried a maximum 10-year sentence.

Prosecutors said Maynulet violated military rules of engagement by shooting a wounded, unarmed man. Maynulet argued the killing was "honourable" and that he shot him to end his suffering.

Capt. Rogelio Maynulet in September 2004. (AP photo)

Prosecutors had sought a three-year prison term in addition to dismissal. They argued that a strong penalty was needed to signal to other U.S. soldiers that such behaviour would not be tolerated.

"What kind of institution does the U.S. army become if assault with the intent to commit voluntary manslaughter is an honorable act?" asked prosecutor Maj. John Rothwell, before sentence was passed.

Maynulet's armoured tank division had been on patrol near Kufa on May 21, 2004, when it was alerted to a car believed to be carrying two militants loyal to the radical Shia cleric Muqtada al-Sadr.

The U.S. troops chased and fired upon the vehicle, wounding both men. The killing was filmed by a U.S. drone surveillance aircraft.