The city beat off stiff competition from Columbus, Ohio, and Council Bluffs, Iowa, to win the right to host the trials for the first time.
"I believe this is a good decision for the future of wrestling at all levels," said wrestling legend Dan Gable of the local organising committee.
"This will help increase the visibility of our sport.
"I see more growth for wrestling as a result - it gets me very excited."
The trials, at Carver-Hawkeye Arena on the campus of the University of Iowa from April 21-22, 2012, will feature competition in the three Olympic styles of the sport – men's freestyle, Greco-Roman and women's freestyle.
They will determine the US athletes who will qualify to represent the United States at the London 2012 Olympic Games.
"We are unbelievably pleased and humbled with the response we received from cities wishing to host our most valuable event property," said USA Wrestling executive director Rich Bender.
"We would like to thank the leaders from all three finalist cities for their outstanding presentations.
"We hope that all of these cities continue to be involved with USA Wrestling and host wrestling events in years to come.
"The Iowa City local organising committee was selected based upon their proven track record of hosting large and successful wrestling events, as well as a history of drawing strong fan support.
"We are committed to working tirelessly with the organising committee and the entire community to host the most successful US Olympic team trials in our history."
Joshua Schamberger, President of the Iowa City/Coralville Area Convention and Visitors Bureau, said: "This community is fired up to welcome our nation's best to Carver Hawkeye Arena and will come together as they have so many times to produce a trials that is remembered for years to come.
"Our entire community couldn't be more excited by this news.
"We look forward to creating an athlete and fan experience that will carry on through London."
Carver-Hawkeye Arena serves as the home of Iowa's wrestling team, as well as its basketball and volleyball squads.
It seats 15,000 for wrestling and is named after long-time wrestling supporter Roy J Carver.
"We are thrilled and excited with this remarkable opportunity to stage an event that will have the full attention of wrestling community not only in the state of Iowa and the Heartland, but the United States and the world," said Gary Barta, athletics director of the University of Iowa.
"We are also delighted with the opportunity to showcase the revitalised Carver-Hawkeye Arena."
The bid selection committee included USA Wrestling staff and athletes, as well as representatives from the US Olympic Committee (USOC).