The decision means that the lower house, the Bundestag, will now have to consider imposing a gender quota on the boards of Germany's 30 blue chip DAX-listed companies.
The Bundesrat, made up of the governments of Germany's 16 states, voted on the issue on Friday.
The Christian Democratic Union state premiers of Saarland and Saxony-Anhalt surprised observers on Thursday by indicating that they would support the proposal initiated by the Social Democratic Party. They made good on their pledge at Friday's session.
The decision puts Chancellor Angela Merkel's government in a dilemma, since the governing coalition - made up of the CDU, its Bavarian sister party the Christian Social Union (CSU), and the Free Democratic Party (FDP) is deeply divided on the issue.
While CSU leader Horst Seehofer and Justice Minister Sabine Leutheusser-Schnarrenberger of the FDP are against the idea, it has long been championed by CDU Labour Minister Ursula von der Leyen.
The CDU's Family Minister Kristina Schröder has her own compromise proposal - a "flexi-quota" decided by the companies themselves. All the opposition parties - the SPD, the Greens, and the socialist Left party - are in favour of an obligatory quota.
Some CDU representatives are thought to be in favour, but they will struggle to convince the CSU and FDP factions of the coalition.
Reiner Haseloff, CDU state premier of Saxony-Anhalt, justified his decision to support the quota on Friday, saying, "Self-regulation has not worked so far, so I think it's up to the politicians," he told state broadcaster Deutschlandfunk.