The US was the only country to vote against the draft resolution put forward by Qatar on behalf of Arab nations. Ten of the 15 Security Council nations voted in favour and four, Britain, Denmark, Slovakia and Peru, abstained.
The draft resolution accused Israel of a "disproportionate use of force" that endangered Palestinian civilians, and demanded Israel withdraw its troops from Gaza.
The draft had been changed before the vote over concerns that it was too biased against Israel. Calls for the release of the Israeli soldier abducted by Palestinian militants and an end to rocket attacks on Israel were added.
But John Bolton, the US ambassador to the UN, said the draft was still unacceptable because it had been overtaken by events in the region - including the capture of two Israeli soldiers by Hezbollah on Wednesday - and was "unbalanced".
"It placed demands on one side in the Middle East conflict but not the other," Bolton said. "This draft resolution would have exacerbated tensions in the region."
US ambassador John Bolton said
the resolution was 'unbalanced'
The resolution called on Israel and the Palestinians to "take immediate steps to create the necessary condition for the resumption of negotiation and restarting the peace process".
It urged all parties to help alleviate the "dire humanitarian situation" faced by Palestinians.
The draft also demanded the release of Palestinian officials arrested by Israel since the offensive began.
The US had campaigned for other nations on the 15-member council to either vote against the resolution or abstain.
The last veto at the Security Council, in October 2004, was cast when the US blocked a resolution condemning another Israeli operation in Gaza.
Eight of the last nine vetoes have been cast by the United States. Seven of those were to do with the Israel-Palestinian conflict.