The veto was announced shortly after the state Senate voted to concur with a same-sex marriage bill passed last week by the Vermont House, the Burlington (Vt.) Free Press reported.
In his veto message, Douglas said Vermont's civil union law "has afforded the same state rights, responsibilities and benefits of marriage to same sex couples."
"Our civil union law serves Vermont well and I would support congressional action to extend those benefits at the federal level to states that recognize same sex unions," he said.
Douglas also said even if the state were to sanction same-sex marriage, gay and lesbian couples in the state would still be denied federal benefits.
The House and Senate are expected to try to override the governor's veto Tuesday. The Free Press said the state Senate is expected to override the veto but it was unclear which way the House would vote.
The House voted 95-52 last week in favor of the legislation but it would take 100 votes to override a veto.