The bill, backed by 267 lawmakers to 116, simplifies permits for "strategic" projects and allows some to proceed based solely on a declaration of commitment.
Despite seeking to make Brazil a leader in the fight against global warming, President Luiz Inacio Lula da Silva backs oil exploration as key to growth in Latin America's biggest economy.
Experts say the new measures could fast-track infrastructure development in the Amazon rainforest.
The bill was approved by the Senate in May. It must now be considered for enactment by Lula.
The measure has divided the president's left-wing government.
The Environment Ministry described it as a "fatal blow" to environmental protection, while the Agriculture Ministry backed it.
Supporters of the reform argued that it seeks to "streamline" the licensing process to boost the country's economy.
But Environment Minister Marina Silva said the fact that "something is of strategic interest to the government does not eliminate the environmental impacts".
Furthermore, environmental licensing "did not prevent the construction of any project in the country," said Rodrigo Agostinho, president of the Brazilian Institute of Environment (IBAMA) public watchdog.
IBAMA has announced it will challenge the law in court, arguing it is unconstitutional.
The Brazilian NGO network Climate Observatory also warned in a statement that the law "could lead to the approval of works and projects that generate significant environmental degradation".
Lula has yet to comment on the new rules.
The United Nations climate change conference, COP30, will take place in the Amazonian city of Belem from November 10 to 21.
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