The UN Human Rights Council on Thursday passed a resolution ordering a first probe into how Israeli settlements may be infringing on the rights of the Palestinians.
The resolution was adopted with 36 votes in favour and 10 abstentions. Only the United States voted against it.
Presenting the resolution, a Pakistani envoy criticised Israel for insisting on building more settlements in the occupied territories, saying that they are "in violation of international humanitarian and human rights laws."
"This resolution seeks to respond to the humanitarian and human rights challenges this illegal Israeli practice has created in the occupied territories," he said.
Beyond ordering an investigation into the implications of settlements, the resolution also calls on Israel to "take and implement serious measures" such as confiscating arms to prevent acts of violence by Israeli settlers.
But the United States spoke up against the move, saying it was "deeply troubled by this Council's bias against Israel."
"Steps like this do nothing to promote a just and lasting peace," said a US envoy, adding that they only serve to "push parties apart."
Israel's move to expand settlements has been criticised by the international community, which deems the action illegal.
Earlier this week, UN rights chief Navi Pillay said the expansion of Israeli settlements is deeply linked to problems including violence in the Occupied Palestinian Territory.