Members of the Edinburgh-based legislature voted 69 to 57 against a bill that would have let people in Scotland with six months or less to live seek help to end their life. There was one abstention on Tuesday.
It came after an emotional debate that lasted around three hours and saw MPs tear up and applaud as they expressed their views on the issue.
They had been given a free vote on the assisted dying bill, which meant they could decide according to their consciences, rather than along party lines.
Scotland is part of the UK - alongside England, Wales and Northern Ireland - and has a semi-autonomous government that has authority over many areas of policy, including health.
Liberal Democrat MP Liam McArthur, who drew up the Scottish bill, had urged colleagues to back it.
"If you believe that dying people should not have to suffer against their will and you have heard, like I have, of the many instances where they have been simply failed by the lack of compassion and safety in our current law, you now have to back this bill," he said.
"It is time to look terminally ill Scots in the eye and make this change."
But opponents of assisted dying argued that disabled, elderly, ill and depressed people could be pressured to end their lives so they're not a burden on others.
Deputy First Minister Kate Forbes of the governing Scottish National Party said she would vote against the bill. Some medical organisations, including the Royal College of Psychiatrists and the Royal Pharmaceutical Society, are also opposed.
"Doctors, psychiatrists, pharmacists and palliative care specialists - the people who would be tasked with implementing this - are asking us not to do it," Forbes said.
A similar bill that would legalise assisted dying in England and Wales is currently bogged down in the British Parliament in London.
The House of Commons approved The Terminally Ill Adults (End of Life) Bill in June, but it has been held up by more than 1000 amendments in the House of Lords.
Supporters of the bill say that is a stalling tactic by opponents. Some members of the chamber, however, say they are providing necessary scrutiny to strengthen the legislation.
Assisted suicide - where patients take a lethal drink prescribed by a doctor - is legal in countries including Australia, Belgium, Canada, Luxembourg, the Netherlands, New Zealand, Portugal, Spain, Switzerland and parts of the US, with regulations on qualifying criteria varying by jurisdiction.
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