The bill, spearhead by the Congress-party led coalition government under the leadership of party President Sonia Gandhi, was approved by a 186-1 vote after contentious debates the past two days that resulted in the suspension of some lawmakers. Some members refused to vote.
The measure, called the women's reservation bill, was first introduced in 1996, but it took 14 years for a new version to gain approval.
"It's a great step forward," Sonia Gandhi was quoted as saying by the Hindustan Times. The report said she had insisted on the measure's passage despite tough opposition including from some within her party.
"We are rewriting gender history," said Arun Jaitley, a leader of Bharatiya Janata Party, India's main opposition party, which voted for the measure.
Indian women currently hold only about 11 percent of parliamentary seats although they have made huge strides in practically all walks of life since the country became independent in 1947.
The reservation bill must now be approved by the larger lower house of parliament where it faces a tougher test. After that, it must be ratified by at least 14 of the 28 state assemblies. The entire process may take about a year, other reports said.