I don't think you can. Are you thinking about installing linux from a usb drive? There are ways designed specially to do this, which you can find with a simple search. But the only way that you could make a usb drive run like a cd drive is to have some way to put an iso9660 format or emulator on it - and I don't think that that's possible.
On the other hand, if you are trying to do this from within an operating system and not on boot up, there are virtual cd drives which take iso files.