The tightening comes after the suspected terrorist attack on Bondi Beach in Sydney, where 15 people were killed.
The tightening of gun laws was voted through with "18 votes in favour and 8 against, thus passing the law," said Ben Cameron, the speaker of the New South Wales Legislative Assembly.
The bill must be formally passed in the state lower house, which is a mere formality.
Among the stricter measures are a ban on foreign citizens being granted a firearms license. The number of firearms that private individuals are allowed to own will be reduced and firearms licenses will be updated at more frequent intervals.
The legislative package has been controversial, and the vote could only be carried out after a protracted debate that extended into Christmas Eve morning, reports Australia's public service broadcaster ABC.
In addition to stricter gun laws, the law includes a ban on demonstrations for up to three months. Several representatives of the Liberal Party and the environmental party The Greens opposed the entire package of laws.
The state's elected leader, Chris Minns, argued that the law must be passed to ensure that police have the resources they need after the shootings in Sydney.
