The new law notably authorises the freezing of embryos and recognises the right of single women to assisted fertilisation.
It was supported by 88 deputies from the centre-left coalition, while 45 MPs voted against and two abstained from the vote.
"Infertility is... an illness recognised by the World Health Organisation. The law allows treatment for this illness. It is a medical law that does not force a person to do anything, but regulates a field that has needed it for years," Health Minister Rajko Ostojic said.
The main conservative opposition party, the Croatian Democratic Union (HDZ) said the new legislation was a "violation of the right to life" echoing the position of the influential local Catholic Church, which have qualified it as "profoundly immoral and inhuman."
Croatia, which is set to join the European Union in mid-2013, for decades had an in-vitro fertilisation (IVF) law allowing the freezing of embryos, dating back to 1978 when the world's first "test-tube baby" was born.
However, when the conservative HDZ party was in power in 2009, it passed new legislation, among the most restrictive in Europe, which included a ban on frozen embryos and allowed only three eggs to be fertilised per attempt.
Many couples undergoing the treatment argued that this drastically reduced their chances of having a baby through IVF and forced them so seek medical help abroad.
Nearly 90 percent of Croatia's 4.2 million population are Roman Catholics.