The law passed 62-55 during a heated session that revealed deep divisions within Israeli society over the religious and democratic character of what many have long called the Jewish state. It proclaims "the state of Israel is the nation-state of the Jewish people" and "the actualization of the right of national self-determination in the state of Israel is unique to the Jewish people". The nation state bill describes Israel for the first time as "the national home of the Jewish people".
The newly-adopted measure is categorized as among Israel's so-called "Basic Laws", which underpin the regime's legal system and are more hard to repeal than regular laws under its constitution.
Those who remained have full equal rights under the law but say they face constant discrimination, citing inferior services and unfair allocations for education, health and housing.
The law will initiate a long-term process that will chip away at the rights and status of Muslim and Christian Arab citizens of Israel, according to opponents.
Israel has passed a law to declare that only Jews have the right of self-determination in the country, something members of the Arab minority have called racist and verging on apartheid.
Palestinian negotiator Saeb Erekat tweeted from a Palestine Liberation Organization account that the law "officially legalizes apartheid and legally defines Israel as an apartheid system".
"So today we have made a law in stone. We will remain steadfast holding on tightly to the historic, national and human rights of our people, wherever they are, including by fully ending the Israeli occupation by freeing the state of Palestine on the 1967 border, with east Jerusalem as its capital, as well as fulfilling all our rights based on global law, including the refugee issue in accordance with UN General Assembly Resolution 194".
As "non-Jews" we are already not allowed to buy or rent land on 93% of the area controlled by the Israeli state, and many of our communities are declared to be "unrecognized" and bulldozed out of existence by Israeli forces.
Jamal Zahalka, an Arab member of the Knesset who voted against the law, told Al Jazeera it establishes a new set of rules that will legitimise anti-Arab racism and increase the building of illegal settlements in the occupied Palestinian territories.
The divisive nature of the new legislation that saw thousands of people, including Arabs and secular Jews flocking to streets in protest, has not stopped Israeli Prime Minister Benjamin Netanyahu from hailing its adoption as a huge success.
The Association for Civil Rights (ACRI) in Israel, along with numerous other NGOs, criticized the law as well.
"It's a tremendous blow to democracy because by law it gives dominance to one ethnic group over another and it doesn't even add protection for the minorities", said Galia Golan, a political scientist at the Interdisciplinary Center in Herzliya, near Tel Aviv.
"This means that Israel does not need to do such work within the country itself", said the IDI.
The concept of the nation-state law, a project put forth by the Israeli far right, has been passionately debated for more than five years. This is our state - the Jewish state.
Benjamin Netanyahu has repeatedly insisted that the Palestinians must recognise Israel as a Jewish state in any final peace settlement. "All people affected by this law must receive protection from the global community".