The vote is a major victory for pro-choice supporters who have fought for decades against Chile's draconian ban on abortion. Since 1989, abortion has been illegal without exception.
The strict law was implemented by dictator Augusto Pinochet as one of his last acts in office. Activists have long criticized the ban.
"The illegality of abortion in Chile takes a devastating toll on women's health and lives," a Human Right's Watch report stated. "The consequences of illegal abortion constitute a leading cause of maternal mortality in this country."
The bill passed Wednesday decriminalizes abortion in cases of rape, if the mother's life is at risk or if the fetus presents a deadly birth defect.
"A bill has been approved that opens up options for women," said Claudia Pascual Grau, Chile's minister of women and gender equity. "We have generated safe health benefits, an accompanying program that is with all women, regardless of the decision they take."
Chile's lower Congressional house, the Chamber of Deputies, had 70 votes in favor, 45 votes against and 1 abstention. The Senate approved the bill by 22 votes in favor and 13 against.
Despite the mandate, Chile's conservative Independent Democratic Union party did object. "Our constitution today protects the life of the unborn, so this bill violates the constitution," the organization said in a tweet.
The bill will now go to the Constitutional Court for final review.
The vote is an important triumph for President Michelle Bachelet, who campaigned on easing the abortion ban and has long championed women's rights.
In 2011, Bachelet unapologetically supported abortion in the case of an 11-year-old girl who became pregnant after being raped by her mother's boyfriend -- an incident that rattled much of the conservative country.
Bachelet was President of Chile from 2006-2010 and was again elected in 2013. Between her terms, she was tapped to become the inaugural Executive Director of UN Women, a United Nations agency created to promote gender equality around the world.
"Today women recover a basic right that we should never miss: decide when we live moments of pain," President Bachelet said in a tweet after the vote.