Prior to the vote, President Yoon said troops had been withdrawn.
The South Korean State Council passed a resolution to officially lift martial law, according to the South Korean Prime Minister's office.
Shortly before the vote, South Korean President Yoon Suk Yeol said troops have been withdrawn, hours after he declared an "emergency martial law."
Yoon had declared martial law in a televised speech on Tuesday, the Yonhap news agency reported. The president said the measure was necessary due to the actions of the country's liberal opposition, which he accused of controlling parliament, sympathizing with North Korea and paralyzing the government.
"I declare martial law in order to eradicate the shameless pro-North Korea anti-state forces that are plundering the freedom and happiness of our people and to protect the free constitutional order," Yoon said, as quoted by ABC News editorial partner KBS.
Hours after the declaration, the National Assembly voted early Wednesday morning local time demanding that the president lift the martial law order. A majority of parliament -- all 190 members who were present, out of the 300-person body -- voted to lift it. Under the South Korean constitution, the martial law must now be lifted.
"The troops deployed for martial law have been withdrawn," Yoon said early Wednesday following the vote.
The State Council then convened to officially lift the martial law.
Explaining his decision to declare martial law on Tuesday, Yoon accused the opposition-dominated parliament of "paralyzing" judicial affairs and the administration via 22 proposed cases of impeachment issued since the body convened in June.
Yoon's conservative People Power Party has been locked in a fierce budget dispute with the liberal opposition Democratic Party.
"The handling of the national budget also cut all major budgets to have control over the essential functions of the state, the budget that was formed to crack down on drug crimes and maintain public security," Yoon said Tuesday. "This undermines the essential functions of the state and leaves the public in a drug paradise and public security panic."
"The National Assembly, which should be the basis of liberal democracy, has become a monster that collapses the liberal democracy system," he added.
The Democratic Party responded by calling on its lawmakers to assemble at the National Assembly building in Seoul, Yonhap reported. Party leader Lee Jae-myung said Yoon's martial law declaration was an "unconstitutional" measure that "goes against the people."
"President Yoon declared emergency martial law for no reason," Lee said, as quoted by Yonhap. "Tanks, armored vehicles and soldiers with guns and swords will soon control the country."
Police and soldiers gathered around the National Assembly on Tuesday night after Yoon spoke. Footage from the scene also showed crowds descending on the building, some people making their way inside. Yonhap reported clashes between security personnel and National Assembly staffers as the former tried to enter the building.
Seoul Mayor Oh Se-hoon -- a member of Yoon's People Power Party -- was among those who called for an immediate reversal of the declaration. "As mayor, I will do my best to protect the daily lives of citizens," he added in a post to Facebook.
President Joe Biden's administration was not alerted of the declaration beforehand, according to a White House National Security Council spokesperson.
"We are seriously concerned by the developments we are seeing on the ground in the ROK," the spokesperson told ABC News.
Biden told reporters he was "just getting briefed" on the martial law declaration, following a speech in Angola on Tuesday evening local time.
His administration is in contact with the South Korean government, a White House National Security Council spokesperson said.
Philip Goldberg, the U.S. ambassador to South Korea, said the U.S. Embassy and Department of State are "closely tracking" the "fluid" situation, while urging people to monitor local news sources for updates.
Tuesday's declaration is the first since the country's democratization in 1987. Martial law was last declared in 1979 after the assassination of dictator Park Chung Hee.
Editor's note: A previous version of this story was updated to reflect that Yoon had withdrawn troops but martial law had not yet been lifted.
ABC News' Joe Simonetti and Fritz Farrow contributed to this report.