Several Republicans, including new Illinois Sen. Mark Kirk, broke with the GOP and joined Democrats in supporting the repeal, which now awaits President Obama's signature.
When President Obama signs the bill into law next week, he will deliver on a campaign promise to end the 17-year ban.
Some advocates and war veterans in Chicago applauded the move Saturday.
When it was enacted in 1993, "don't ask, don't tell" was seen as a compromise policy between the military's outright gay ban at the time and those who wanted gays to serve openly. Since then, more than 13,000 men and women have been discharged from the military for violating "don't ask, don't tell."
Those who wanted to keep the policy in place said war time was not the right time to act, but supporters of the repeal said the move was simply long overdue.
It was a landmark vote on Capitol Hill over the weekend. The bill, which passed the U.S. House of Representatives Wednesday, clears the way for President Obama to repeal the Clinton-era policy.
"The existing 'don't ask, don't tell policy' is, in my opinion, inconsistent with basic American values," independent Conn. Sen. Joe Lieberman said.
"'Don't ask, don't tell' is a wrong that should never have been perpetrated," said Sen. Ron Wyden, a Democrat representing Oregon.
The vote is seen as a victory for gay rights groups that have long been opposed to the policy, which bars gays from serving openly in the military.
Chicago Korean War Veteran Jim Darby spent four years in the U.S. Navy. He says being gay in the military weighed on him.
"I'm still numb because I really did not believe it was going to happen," Darby told ABC7 Chicago.
Darby was a Russian translator, an important job during the Cold War, but he left after serving four years , in part, because he is gay.
"I thought, you know, I will fall in love with somebody, and then what?" he said. "I might have stayed in. I probably would have stayed in because I loved what I was doing."
"Everyone understood what's at stake. It is about what's best for our country, what's best for our military, what's best for our American people, and not what's best for political posturing," said Bernard Cherkasov, CEO, Equality Illinois.
Opponents of the bill-- which included some military leaders-- had argued repealing "don't ask, don't tell" during a time of war would jeopardize U.S. efforts overseas.
"I hope that when we pass this legislation that we will understand that we are doing great damage," Republican Arizona Sen. John McCain said.
"Should it be done at some point in time? Maybe so, but in the middle of a military conflict is not the time to do it," said Republican Georgia Sen. Saxby Chambliss.
In the end, senators voted 65-31 to pass the bill. Democrats were joined by eight Republicans in voting for the bill. Illinois Sen. Mark Kirk, one of the eight, said in a statement that Congress needed to act in the face of mounting court challenges.
"I support the joint chiefs' recommendation to implement the repeal of the current policy once the battle effectiveness of the forces is certified and proper preparations are complete," Kirk wrote.
"I know he took some grief from his side of the aisle for doing it, but it showed real courage on his part," Democratic Illinois Sen. Dick Durbin said via telephone. "I'm glad he stepped up."
The House of Representatives passed an identical version of the bill, 250-175, earlier in the week.
The U.S. military helped Darby go to college and become a teacher. He says he hopes Saturday's vote helps others achieve their dreams.
"I did get my college paid for under the GI Bill, and there are young gay people growing up today who don't have that same opportunity," he said.
After signing the bill, Mr. Obama and his top military advisors then must certify that lifting the ban won't hurt the fighting ability of troops.
After that, there's a 60-day waiting period for the military before the new policy goes into effect.
(The Associated Press contributed to this report.)