The 15-7 vote -- with Republicans Lisa Murkowski of Alaska, Orrin Hatch of Utah and Mark Kirk of Illinois joining committee Democrats -- came two weeks after the U.S. Supreme Court issued two landmark decisions on same-sex marriage.
Federal law prohibits employment discrimination based on race, religion, gender, national origin, age or disability.
Sen. Tom Harkin, D-Iowa, said during a committee hearing on the Employment Non-Discrimination Act discrimination based on sexual orientation or gender identity "is wrong and cannot be tolerated."
"It is still entirely legal to fire, refuse to hire or otherwise discriminate against a citizen based on sexual orientation or gender identity," he said.
Mara Keisling, executive director of the National Center for Transgender Equality, told the Los Angeles Times the committee vote was "huge."
The bill had never advanced this far in the 17 years since it was first introduced she said.
"It's mostly because of people coming out to their families, reporters and churches," Keisling said. "Everybody knows a gay person now, and more and more people know a trans person. It's an issue that 20 years from now, opponents are going to be ashamed to have opposed."
The committee approved the bill after it was amended to include a religious exemption for employers.
Majority Leader Harry Reid, D-Nev., has said the full Senate may consider the bill this year, the Times reported.
White House press secretary Jay Carney told reporters the bipartisan nature of the committee vote "reflects the strategy the president has long believed is the right one when it comes to these matters, and we'll continue to press for broader support in the Senate and then in the House on this issue."