The UN General Assembly has voted to grant the Palestinians non-member observer state status - a move opposed by Israel and the US.
Palestinian President Mahmoud Abbas told the assembly the vote was the "last chance to save the two-state solution" with Israel.
Israel's ambassador to the UN, Ron Prosor, said the bid "doesn't advance peace - it pushes it backwards".
The assembly voted 138-9 in favour, with 41 nations abstaining.
Hundreds of Palestinians celebrated on the streets of Ramallah, in the West Bank, after the result was announced.
"Sixty-five years ago on this day, the United Nations General Assembly adopted resolution 181, which partitioned the land of historic Palestine into two states and became the birth certificate for Israel," Mr Abbas told the assembly.
"The General Assembly is called upon today to issue a birth certificate of the reality of the State of Palestine," he said.