Under the legislation, publicly traded companies with employee representation on the board will include 30 percent women directors as of 2016.
It would impact about 100 of Germany's largest companies, while a total of 3,500 firms will also have to set binding targets for increasing the number of women in management jobs from 2015.
There will be strict new rules for the civil service, which will be expected to achieve a strict 50/50 ratio between men and women in all jobs.
"We are making an historic step for Germany," said Minister for Family Affairs, Senior Citizens, Women and Youth Manuela Schwesig, the driving force behind the bill.
Critics had said the bill had been poorly drafted and may result in companies moving to other countries, echoing the effects of similar legislation in Norway.
German women are the least likely to be unemployed within the EU, but still feel disadvantaged in the workforce, a survey released on Friday by the European statistics office Eurostat showed.
Eurostat also revealed on Thursday that while the wage gap between men and women shrank slightly between 2008 and 2013, women still earn 21.6 percent less per hour than men.
International Women's Day
The vote also comes as organizers across the country are prepping events for International Women's Day on Sunday March 8.
The German Historical Museum in Berlin is hosting a free tour event highlighting famous female leaders -- as well as terrorists -- throughout German history.
Munich is hosting a series of events, including a concert of an all-female accordion band, a knitting circle welcoming female refugees to promote cultural exchange and a cabaret show at night.
The topic of refugee acceptance is also part of a free event hosted by Hamburg's Women's Alliance, which will feature workshops from a female refugee cafe and a discussion on political persecution.
Frankfurt's Museum for Modern Art (MMK) will host a free event to introduce its new MMK 2 branch, featuring an exhibit highlighting how women have influenced art.