Under the new law, gay couples registered in a legal partnership - permitted in Sweden since 1995 - will be able to adopt children both within the country and from abroad.
It was passed by the parliament by 198 votes to 38, with 71 abstentions.
The bill is the product of 18 months of research which showed that gay couples are just as capable as their heterosexual counterparts of caring for and rearing a child.
But correspondents say in practice it may mean little for those homosexual couples wanting children. Many countries where childless, Western couples look to adopt, will not give children up to gays.
And few children are put up for adoption in Sweden itself: in 2000, the figure was just 16.
Moving forward
Sweden joins Denmark, Iceland and the Netherlands in allowing gay couples adoption rights. The UK is currently involved in a heated debate over a bill to allow unmarried couples, both homosexual and heterosexual, to adopt.
The Netherlands does not, however, permit homosexual couples to adopt from abroad, saying it could meet with resistance from countries with children up for adoption and jeopardise the chances of heterosexual Dutch couples.
Although the Swedish bill does allow homosexuals to look abroad, 17 countries surveyed by the Swedish Foreign Ministry said they would refuse gays as adoptive parents.
The Swedish Government also proposed allowing lesbians to receive artificial insemination, but the issue has been put on hold until a number of legal loopholes have been cleared up.
A decision is awaited on the case of a man who privately donated his sperm to a lesbian couple, only to find himself pursued for child support money once the couple had split up.
Sweden will have to inform the Council of Europe of its withdrawal from a convention on adoption, which stipulates that only married couples or a single person have the right to adopt.
The law is likely to come into effect early next year.
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