Cheers and applause broke out as lawmakers voted in favor of the bill following hours of debate and emotional speeches at Parliament House in Canberra.
The bill passed its third reading with only four members of Parliament in opposition.
Thursday's vote comes three weeks after the Australian public voted overwhelmingly to legalize same-sex marriage as part of a national postal survey lasting two months.
Same-sex marriage is an overdue reform and should not require more debate.
Additionally, the passing of the same-sex marriage law will be a strategic political win for Turnbull, who has been strongly opposed by his predecessor Tony Abbott, a staunch supporter of conventional marriage.
Bindi Irwin and Hugh Sheridan were among the stars celebrating passage of same-sex marriage.
The legislation, drafted by Liberal Senator Dean Smith, passed through the upper house last week without any changes.
The Jensens first said they'd get divorced if same-sex couples could get married back in 2015.
The Australia of tomorrow begins with what we do today. "Equality isn't in our legal birthright of every Australian and this equality is long overdue", said Mr Shorten.
"The overwhelming final lower house vote ... is a hugely welcome result after the weeks, months and years of campaigning, particularly after the more recent anxiety and distress for LGBTIQ people and our families", Sally Goldner, a bisexual and transgender rights advocate in the city of Melbourne, told the Washington Blade after the vote. "This is Australia: fair, diverse, loving and filled with respect".
With the new bill, same-sex couples that were legally married in other countries will now have these marriages recognized.
About 12.7 million people participated in the survey, which had a response rate of almost 80% - which is considered very high.
"The Australian people were promised that their freedom of speech, freedom of religion and parental rights would be protected in any same-sex marriage legislation, and this has not happened", he said.