The United States has stopped its financial contributions to the United Nations' cultural and scientific agency, UNESCO, because the agency has voted to admit Palestine as a full member.
The State Department says it was to have made a payment of $US60 million to UNESCO this month but will not now be doing so.
It says long-standing US laws force the Obama administration to end its support for UNESCO, an agency that relies on the US for more than a fifth of its income.
A large majority of delegates at a meeting at UNESCO headquarters in Paris supported the motion, which specifically used the name Palestine.
In an emotional session, China, Russia, India, Brazil and South Africa were among those who voted in favour; Canada and Germany joined the US and Israel in voting against; Britain and other Western nations abstained.
Of 173 countries voting, 107 were in favour, 14 were opposed and 52 abstained. A two-thirds majority is enough for a motion to pass.
The UN Security Council will vote next month on whether to grant the Palestinians full UN membership.
Arab states instrumental
The BBC's correspondent in the West Bank says Palestinian leaders see UNESCO membership as part of a broader push to get international recognition and put pressure on Israel.
"This vote will erase a tiny part of the injustice done to the Palestinian people," Palestinian foreign minister Riyad al-Malki told the Paris meeting after the result was announced.
An Israeli foreign ministry statement 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 US lobbied hard to try and force the Palestinians to back down, the BBC reports, but Arab states were instrumental in getting the vote passed.
No member has a right of veto in UNESCO, where each representative has one vote irrespective of a country's size or budget contribution.