Sixty-two politicians, including Prime Minister Benjamin Netanyahu, voted in favour and 48 against the bill, championed by far-right National Security Minister Itamar Ben-Gvir.
There was one abstention and the rest of the members were not present.
An Israeli rights group is to appeal the decision in court.
The law includes provisions requiring sentencing within 90 days with no right to clemency.
Critics said that it targets Palestinians in the West Bank by instructing military courts in the occupied territory to impose the death penalty in cases involving killings of Israelis, except in “special circumstances”.
Those courts only try Palestinians and have a near 100% conviction rate, rights groups say.
A leading Israeli human rights group said that it had filed a petition with the country’s supreme court challenging the bill.
“The Association for Civil Rights in Israel filed a petition today to the High Court of Justice, demanding the annulment of the Death Penalty for Terrorists Law, enacted by the Knesset today, March 30, 2026,” the rights group said in a statement shortly after politicians passed the bill.
The group said there were two grounds for annulling the law.
“First, the Knesset has no authority to legislate for the West Bank. Israel holds no sovereignty there,” it said, referring to the Israeli-occupied Palestinian territory.
“Second, the law is unconstitutional. It violates the right to life, human dignity, due process, and equality — rights protected under (Israel’s) Basic Law: Human Dignity and Liberty.”
Hamas, Palestinian Authority condemn law
Hamas said the approval of the legislation “reflects the bloody nature of the occupation [by Israel] and its policy based on killing and terrorism”.
The Palestinian Authority condemned the adoption of the law, describing it as a “dangerous escalation”.
In a post on X, the Ramallah-based Palestinian foreign ministry said: “Israel has no sovereignty over Palestinian land”, adding: “This law once again reveals the nature of the Israeli colonial system, which seeks to legitimise extrajudicial killing under legislative cover”.
Minister for Foreign Affairs Helen McEntee condemned the passing of the bill.
In a statement, she said she was concerned about its discriminatory nature.
“The right to life is a fundamental human right and Ireland is consistently and strongly opposed to the use of the death penalty in all cases and in all circumstances,” she said.
“I am particularly concerned about the de facto discriminatory nature of the bill as it relates to Palestinians.
“Ireland urges the Israeli government and parliament to not implement this law.”
European states say bill is discriminatory
The vote on the bill was the latest action by members of Mr Netanyahu’s right-wing coalition to cause concern among Israel’s allies in Europe, who have also been critical of Jewish settler violence against Palestinians in the West Bank.
Israeli media reported that Mr Netanyahu had previously asked for some elements of the measure to be softened to head off an international backlash.
The original bill had mandated the death sentence for non-Israeli citizens in the West Bank convicted of deadly terrorist acts.
The revised legislation that was voted on includes the option of life imprisonment.
Even before the vote on its passage, the bill drew criticism from the foreign ministers of Germany, France, Italy and the UK, who said it had a “de facto discriminatory” character toward Palestinians.
A group of United Nations experts has said that the legislation included “vague and overbroad definitions of terrorist”, meaning the death penalty could be meted out over “conduct that is not genuinely terrorist” in nature.
Mr Ben-Gvir argued that the death penalty would deter those considering an attack similar to the Hamas-led assault of 7 October 2023, that killed nearly 1,200 in Israel.
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