Guatemala's Congress has passed a new bill that it hopes will tighten adoption rules in the country.
Guatemala is trying to comply with an international adoption treaty
The new law will eliminate mediators, create a federal adoption agency and prohibit birth parents from receiving financial compensation.
The government has been under pressure to curb a controversial trade where intermediaries are paid up to $40,000 (£19,600) to arrange an adoption.
Almost 5,000 Guatemalan babies were adopted by foreigners in 2006.
The UN says most of the children went to the United States, making Guatemala the second largest source of children adopted in the US, after China.
President Oscar Berger is expected to sign the bill into law.
"We hope to bring an end to these criminal mafias of lawyers and illegal foster homes that have run adoptions in the country," Congresswoman Nineth Montenegro told reporters after the vote.
Currently, Guatemalan adoptions are handled by notaries who work with birth mothers, determine if babies are surrendered willingly, hire foster mothers and handle the paperwork.
Critics have claimed that the system allows birth mothers to sell their babies for profit, and some adoptive parents worry that their babies might have come to them through unethical means.
In March, the US state department warned American citizens to avoid Guatemalan adoptions entirely until the process was better regulated.
The reforms come as Guatemala, like the US, moves toward a 2008 deadline for complying with an international adoption treaty, the Hague Convention on Intercountry Adoption.
There had been fears in the US that the changes would leave in limbo about 3,700 children already matched with prospective parents.
However, the new law should allow all adoptions already in process to go through under the current rules.
The US state department had urged Guatemala to make an exception for pending cases.