So far, US President Barack Obama has deployed about 1,600 military advisors to Iraq, but has stressed that "boots are not on the ground" in a combat role.
However, Dempsey said Obama has ordered him to come back on a "case-by-case basis" if the use of ground forces need to be reconsidered.
"My view at this point is that this coalition is the appropriate way forward. I believe that will prove true. But if it fails to be true, and if there are threats to the US then I, of course, would go back to the president and make a recommendation that may include the use of US military ground forces," Dempsey said during a hearing of the Senate Armed Services Committee.
Dempsey said one circumstance that could require the use of ground troops would be if Iraqi or Kurdish forces were poised to retake Mosul, which IS forces captured in June.
Dempsey: I believe we can destroy IS in Iraq
"It could very well be part of that particular mission to provide close combat advising or accompanying for that mission," Dempsey added.
The general's remarks opened the door to increased US military involvement in Iraq at a time when liberals in Congress are increasingly anxious about President Obama's request to train rebel forces in Syria.
Dempsey emphasised that military actions would be "part of a whole of government effort that works to disrupt IS financing, interdict the movement of foreign fighters across borders, and undermine the IS message."
"Within a coalition of capable, willing regional and international partners, I believe we can destroy IS in Iraq, restore the Iraqi-Syrian border, and disrupt IS in Syria," he said.
"ISIL will ultimately be defeated when their cloak of religious legitimacy is stripped away and the populations on which they have imposed themselves reject them."