The overwhelmingly Catholic country is the last nation in Western Europe that has given some rights to gay and lesbian couples after a years-long battle.
Premier Matteo Renzi described the passage of the bill on Thursday as "historic".
However gay and lesbian groups have denounced the legislation as a betrayal, because Mr Renzi's Democratic Party sacrificed a provision to allow same-sex couples to adopt in order to ensure passage.
Despite this, the legislation, which must still pass the lower Chamber of Deputies, is significant for an overwhelmingly Roman Catholic country where the Vatican holds sway in politics and society.
Pope Francis has remained silent as the debate raged in recent months though.
Speaking in 2013 the pontiff said LGBT people should not be marginalised, saying "If a person is gay and seeks God and has good will, who am I to judge?"
The legislation passed 173-71, well over the threshold necessary.
