A 'no' vote for negotiation
Israeli Ambassador Danny Danon bluntly told the council that the resolution would not have the hoped-for impact of spurring peace efforts.
"By voting 'yes' in favor of this resolution, you have in fact voted 'no'. You voted 'no' to negotiation, you voted 'no' to progress and a chance for better lives for Israelis and Palestinians, and you voted 'no' to the possibility of peace," Danon told the council.
Palestinian ambassador Riyad Mansour said the resolution "may be too little, too late."
Friday's vote was scheduled at the request of four countries -- New Zealand, Malaysia, Senegal and Venezuela -- who stepped in to push for action a day after Egypt put the draft resolution on hold.
After the resolution passed, Israel announced its ambassadors to Senegal and New Zealand had been ordered to return for consultations. It has no diplomatic relations with Venezuela or Malaysia.
In response to Israel's announcement New Zealand's Foreign Minister Murray McCully said in a statement to AFP that the decision should "not come as a surprise to anyone."
"We have been very open about our view that the (Security Council) should be doing more to support the Middle East peace process and the position we adopted today is totally in line with our long established policy on the Palestinian question," he said.
Egyptian President Abdel Fattah al-Sisi backtracked on the move to condemn Israel's settlement policy after receiving a phone call from President-elect Trump, who spoke out in favor of a US veto.
The United States vetoed a similar resolution in 2011, which was the sole veto cast by the Obama administration at the Security Council.
Washington has used its veto a total of 30 times to block council resolutions concerning Israel and the Palestinians, according to Security Council Report, a research organization.
It last abstained in 2009 on a resolution calling for a ceasefire in Gaza.
The Middle East peace process has been comatose since a US initiative to re-launch peace talks collapsed in April 2014.
France has announced plans to host an international conference on January 15 to try to restart talks based on the two-state solution.
Trump campaigned on a promise to recognize Jerusalem as Israel's capital and chose as ambassador to Israel the hardliner David Friedman, who has said Washington will not seek to curtail settlement building in the occupied West Bank.