The UN cultural organisation has voted strongly in favour of membership for the Palestinians - a move opposed by Israel and the United States.
Of 173 countries voting, 107 were in favour, 14 opposed and 52 abstained.
In response, Washington announced it is cutting funding to Unesco. Its membership dues provide around a fifth of the organisation's budget.
The UN Security Council will vote next month on whether to grant the Palestinians full UN membership.
Membership of Unesco - perhaps best known for its World Heritage Sites - may seem a strange step towards statehood, says the BBC's Jon Donnison, in Ramallah, but Palestinian leaders see it as part of a broader push to get international recognition and put pressure on Israel.
This is the first UN agency the Palestinians have sought to join since submitting their bid for recognition to the Security Council in September.
"This vote will erase a tiny part of the injustice done to the Palestinian people," Palestinian Foreign Minister Riyad al-Malki told the meeting of the UN educational, scientific and cultural organisation in Paris, after the result was announced.
Widespread applause greeted the result of Monday's vote in the chamber, where a two-thirds majority is enough to pass a decision.
The BBC's David Chazan in Paris, where Unesco has its headquarters, says Arab states were instrumental in getting the vote passed despite intense opposition from the US.
He says that in an emotional session, China, Russia, India, Brazil and South Africa voted in favour of Palestinian membership, while the US, Canada and Germany voted against and the UK abstained.
A US law passed in the 1990s allows Washington to cut funding to any UN body that admits Palestine as a full member.
"We were to have made a $60m payment to Unesco in November and we will not be making that payment," state department spokeswoman Victoria Nuland told journalists in Washington.
Earlier, White House spokesman Jay Carney said the Unesco vote was "premature and undermines the international community's shared goal of a comprehensive, just and lasting peace in the Middle East", while US ambassador to Unesco David Killion said it would "complicate our ability to support Unesco's programmes."
Israel called the vote a "unilateral Palestinian manoeuvre which will bring no change on the ground but further removes the possibility for a peace agreement".
"The Palestinian move at Unesco, as with similar such steps with other UN bodies, is tantamount to a rejection of the international community's efforts to advance the peace process," a foreign ministry statement said.
Peace talks between Israel and the Palestinians have been stalled since last year over the issue of Israeli settlement building.
The Israeli statement also said Israel would be considering further steps regarding its co-operation with Unesco.
Correspondents say Monday's vote is a symbolic breakthrough but that on its own it will not create a Palestinian state.
A vote is expected in November at the UN Security Council on granting full membership of the UN to the Palestinians. The US has threatened to use its veto.
No member has a right of veto in Unesco, where each representative has one vote irrespective of a country's size or budget contribution.
Unesco - like other UN agencies - is a part of the world body but has separate membership procedures and can make its own decisions about which countries belong. Full UN membership is not required for membership in many UN agencies, the Associated Press reports.
The US boycotted Unesco for almost two decades from 1984 for what the state department said was a "growing disparity between US foreign policy and Unesco goals".