US Ambassador John Danforth on Tuesday exercised his veto power by voting "no" while Britain, Germany and Romania abstained.
Eleven members of the 15-nation council voted in favour of the resolution, aimed at ending military operations that has already claimed more than 70 Palestinian lives.
The latest veto was the 80th by the US in 59 years - including 29 vetoes concerning the Israeli-Palestinian conflict.
The draft resolution demanded "the immediate cessation of all military operations in the area of northern Gaza" and the withdrawal of Israeli forces.
Voting in favour of the resolution were Russia, France, China, Spain, Angola, Chile, Pakistan, Algeria, Benin, Brazil and the Philippines.
Danforth told the council the resolution was "lopsided and unbalanced", lacked credibility and deserved a "no" vote.
"The United States has no problem with tough words, but only when they are accurate and there is balance," he said.
The resolution "does not mention 200 rockets launched this year alone. It does not mention the two Israeli children who were playing outside last week when a rocket suddenly crashed into their young bodies", he said.
But Algerian Ambassador Abd Allah Baali, the council's only Arab member, said the 15-nation body appeared to be effective only when it chastised Arab nations.
He recalled the recent resolution telling Syrian troops to pull out of Lebanon.
"We regret that such a balanced and credible text that was merely calling upon Israel to end its military operation which causes so many human losses and so much damage has not gained unanimous endorsement by the council," he said.
Palestinian UN observer Nasir al-Qudwa said some council members spoke only of Israeli deaths when in fact the Israeli army was trying to destroy "the entire Palestinian people - the destruction of its life and its future".
Israel's UN Ambassador Dan Gillerman blamed "the evil Palestinian leadership" for the crisis.
"Were it not for their tragic leadership and their choice of terror rather than a settlement when one was offered, the Palestinian people would long ago have had their own state," he said.
French Ambassador Jean-Marc de la Sabliere said he supported the resolution because the council needed to respond rapidly "to the steadily deteriorating situation in Gaza".