The UN Security Council has passed a resolution urging an end to illegal Israeli settlements after the US refused to veto it, instead abstaining.
The motion was passed with 14 votes in favour and one abstention.
The Egyptian-drafted resolution had been withdrawn after Israel asked Donald Trump to intervene but it was proposed again by Malaysia, New Zealand, Senegal and Venezuela.
The US has traditionally sheltered Israel from condemnatory resolutions.
The issue of Jewish settlements is one of the most contentious between Israel and the Palestinians, who see them as an obstacle to peace.
About 500,000 Jews live in about 140 settlements built since Israel’s 1967 occupation of the West Bank and East Jerusalem. The settlements are considered illegal under international law, though Israel disputes this.
US policy reverse: Analysis by Barbara Plett Usher, BBC UN correspondent
The resolution reflects an international consensus that the growth of Israeli settlement-building has come to threaten the viability of a Palestinian state in any future peace deal.
It is a view strongly shared by the Obama administration, and for that reason the US reversed its policy of vetoing any UN Security Council criticism of Israel.
It is a decision that was taken after months of debate within the administration about whether and how President Obama might be able to define his position on a two-state solution before leaving office.
But his successor Donald Trump has made clear he intends to strongly support Israeli government positions, even making a highly unorthodox intervention before the vote by publicly urging Mr Obama to veto the resolution.
The US ambassador to the UN, Samantha Power, said the resolution reflected the “facts on the ground” that settlement growth had been accelerating.
“The settlement problem has gotten so much worse that it is threatening the two-state solution,” she said.
She criticised Israeli Prime Minister Benjamin Netanyahu’s support for settlement expansion, saying: “One cannot simultaneously champion expanding settlements and champion a two-state solution that would end the conflict.”
However, Ms Power added that the US had not voted in favour of the resolution because it was “too narrowly focused” on settlements.
She added that even if all settlements were dismantled, both sides would still have to acknowledge “uncomfortable truths” and make “difficult choices” to reach peace.
Shortly before the vote, a senior Israeli official, quoted by the Associated Press news agency, said: “President Obama and Secretary [of State John] Kerry are behind this shameful move against Israel at the UN.
“The US administration secretly cooked up with the Palestinians an extreme anti-Israeli resolution behind Israel’s back which would be a tail-wind for terror and boycotts and effectively make the Western Wall [in Jerusalem] occupied Palestinian territory.
“President Obama could declare his willingness to veto this resolution in an instant but instead is pushing it.”
The official, who was not named, added: “This is an abandonment of Israel which breaks decades of US policy of protecting Israel at the UN and undermines the prospects of working with the next administration [and] advancing peace.”
A senior US official responded by saying Washington had not been involved in drafting or promoting the resolution.
The official, speaking to Reuters news agency, also said the US had not told any other Security Council members how it would vote.
On Thursday, Mr Trump had urged the Security Council to defeat the motion.
“Peace between the Israelis and the Palestinians will only come through direct negotiations between the parties, and not through the imposition of terms by the United Nations,” he said in a statement.
“This puts Israel in a very poor negotiating position and is extremely unfair to all Israelis.”
Mr Trump takes over as president on 20 January.