Israel claims US "abandoned" it during the vote
United Nations Secretary-General Ban Ki-moon has welcomed a resolution demanding an end to Israeli settlements in Palestinian territories.
The Obama administration defied calls from the Israeli prime minister and US President-elect Donald Trump to use its veto.
The US instead abstained in the vote.
The resolution - which Israel has already dismissed as "absurd" - was first tabled by Egypt, but they withdrew it under pressure from the Israelis and Mr Trump.
The President-elect wanted the US to veto the resolution when it was re-tabled by New Zealand, Malaysia, Senegal and Venezuela.
After the vote Mr Trump tweeted: "As to the U.N., things will be different after Jan. 20th."
As to the U.N., things will be different after Jan. 20th.— Donald J. Trump (@realDonaldTrump) December 23, 2016
UN chief Ban Ki-moon welcomed the resolution - which states that the establishment of Israeli settlements in Palestinian territory occupied since 1967 have "no legal validity," constitute a "flagrant violation" under international law and are a "major obstacle" to a two-State solution.
"The resolution is a significant step, demonstrating the Council's much needed leadership and the international community's collective efforts to reconfirm that the vision of two States is still achievable," the UN chief's spokesperson said in a statement.
"The Secretary-General takes this opportunity to encourage Israeli and Palestinian leaders to work with the international community to create a conducive environment for a return to meaningful negotiations.
"The United Nations stands ready to support all concerned parties in achieving this goal."
In the resolution, the council reiterated its demand that Israel "immediately and completely cease all settlement activities in the occupied Palestinian territory, including East Jerusalem, and that it fully respect all of its legal obligations in this regard."
Applause erupted in the Security Council chamber after the vote:
Palestinians called it "a day of victory" and a "big blow" to Israeli policy.
Presidency spokesman Nabil Abu Rudeina said the resolution, adopted by a vote of 14 to zero, showed there was "strong support for the two-state solution".
But a statement from Prime Minister Benjamin Netanyahu's office said: "Israel rejects this shameful anti-Israel resolution at the UN and will not abide by its terms.
"The Obama administration not only failed to protect Israel against this gang-up at the UN, it colluded with it behind the scenes.
"Israel looks forward to working with President-elect Trump and with all our friends in Congress, Republicans and Democrats alike, to negate the harmful effects of this absurd resolution.
"Peace will come not through UN resolutions, but only through direct negotiations between the parties.
"And that's why this proposed resolution is bad. It's bad for Israel; it's bad for the United States; and it's bad for peace."
Explaining the move, US ambassador to the United Nations Samantha Power told the Security Council: "The US has been sending the message that the settlements must stop, privately and publicly, for nearly five decades."
And she added: "Our vote today is fully in line with the bi-partisan history of how American presidents have approached both the issue and the role of this body."