A highly contentious bill was passed into law by Israeli lawmakers in spite of widespread opposition.
The Supreme Court's ability to overturn governmental decisions it deems unreasonable is eliminated by the law.
It is the first of several hotly contested reforms intended to limit the influence of courts that have been approved.
The proposed reforms have resulted in some of the largest demonstrations in Israel's history, and opponents have warned that they could endanger the country's democracy.
The government contends that the actions are required to address a power imbalance that has resulted in courts getting more involved in political decisions in recent years.
The opposition boycotted the final vote, which resulted in the so-called "reasonableness" bill being approved by 64 votes to 0.
Opposition leader Yair Lapid described the action as "a takeover by an extreme minority over the Israeli majority" in remarks to the Knesset (parliament).
However, Israel's justice minister, Yariv Levin, praised the lawmakers, saying: "We have begun an historic process to reform the judicial system. ".
With the vote, months of unrest come to an end. Israel's president had warned the political elite on Monday that the nation was "in a state of national emergency.".
In the early hours of Monday, amid a cacophony of drums, whistles, and air horns, police used water cannon to disperse protesters who were blocking a boulevard outside the Knesset.
According to local media, one protester was injured, and six people were taken into custody, according to police. Other protesters gathered around a police van and yelled at the officers, "Shame!".
A protester who was lying in the street told the BBC that he was resisting "dictatorship" and mentioned that his grandfather had worked at the renowned Bletchley Park in the UK during World War II to break codes used by the Nazis.
When asked how long he intended to stay, he responded, "We will never surrender.".
Reut Yifat Uziel, a paratrooper's daughter who appears in a famous Israeli photo of the Israeli army capturing the Western Wall during the Middle East war of 1967, expressed concern for her children's future.
She declared, "Netanyahu kidnapped the country, and I fear it will turn into a theocracy.".
Tens of thousands of protesters, who marched nearly parallel to one another for 45 miles (70 kilometers) from Tel Aviv to Jerusalem at the end of last week, set up camp in a park between the Knesset and the Supreme Court.
Benjamin Netanyahu, the prime minister, attended the vote in parliament just hours after being released from the hospital following an unforeseen pacemaker surgery on Saturday.
One of the worst domestic crises in Israeli history has been brought on by the divisive reforms that have polarized the nation.
Since the beginning of the year, hundreds of thousands of protesters have taken to the streets every week to express their outrage at what they perceive to be an assault on democracy. The government claims the changes will strengthen democracy because the Supreme Court has recently accumulated an excessive amount of political sway.
The fact that thousands of reservists, including air force pilots who are essential to Israel's offensive and defensive capabilities, have vowed not to sign up for service has exacerbated the crisis. Concern over the potential effects on Israel's military readiness has arisen as a result of this unprecedented dissension.
Those opposed to the government's reforms include former heads of Israel's security services, chief justices, and well-known figures in the legal and business world.
The reforms have also drawn criticism from US President Joe Biden, who called for their delay in his most direct remarks to date.