In a historic vote, MSPs voted by 73 to 50 in favour of amendments criticising both the justice secretary Kenny MacAskill's decision and his handling of the matter.
Scottish Conservative leader Annabel Goldie said it proved the release was not carried out "in Scotland's name".
There are calls for Holyrood's justice committee to launch an inquiry into the decision-making process. Significantly, however, opposition parties did not press for a vote of no-confidence in the SNP administration.
Read further analysis of this story by David Maddox here
The vote came amid growing concerns over the international impact on Scotland and the UK of Abdelbaset Ali Mohmed al-Megrahi's release, with some commentators saying Britain's special relationship with the United States would be damaged for "years to come".
This was heightened by reports of a pipe band from New Zealand parading in Tripoli, playing Scotland the Brave as part of Libya's celebrations to mark the 40th anniversary of Colonel Muammar al-Gaddafi seizing power.
And last night, US senator Frank Lautenberg, a Democrat, called for a congressional panel to investigate whether any oil deal had played a role in Megrahi's release.
Former Labour first minister Jack McConnell joined the debate, saying Mr MacAskill's decision meant Scotland had turned its back on agreements with the US and the United Nations that the man responsible for the atrocity would serve his time in Scotland.
"We Scots have been trusted the world over, our justice system has been admired for centuries but, in one announcement, this reputation has been damaged, tarnished for years to come," he said.
The SNP had been expecting to lose yesterday's vote, but the party's hoped-for rebellion by a small group of opposition back-benchers who supported the minister's decision failed to materialise. Only Labour MSP Malcolm Chisholm voted with the Scottish Government, along with the two Greens.
Independent MSP Margo MacDonald abstained and Conservative MSP Ted Brocklebank, who had earlier raised concerns over Megrahi's guilt, decided not to take part in the vote.
Mr MacAskill's decision was also supported by Foreign Secretary David Miliband, and Prime Minister Gordon Brown said he respected the ruling.
Their statements came after revelations from former Foreign Office minister Bill Rammell on Tuesday that neither man had wanted Megrahi to die in jail.
That appeared to force Mr Brown into denying there had been any deal to free the Lockerbie bomber and repeating that the decision was one for the Scottish Government alone, in which his administration did not interfere.
He seemed to back the release when he said: "I respect the right of Scottish ministers to make the decision, and the decision. But on our part, there was no conspiracy, no cover-up, no double-dealing, no deal on oil, no attempt to instruct Scottish ministers, no private assurances by me to Colonel Gaddafi."
Earlier, Mr Miliband was clearer when he said: "The decision to make was for the Scottish Government, and they have done so in a way which we respect."
The backing of two of the UK's most senior Cabinet ministers appeared to undermine yesterday's attack by Labour MSPs.
During the debate at the Scottish Parliament, First Minister Alex Salmond made a point of order, saying Labour should alter its amendment in light of the support for the decision by Mr Brown.
He described Labour's position as "ridiculous" and later mocked Iain Gray when it became clear that the Labour leader had not even spoken to his colleagues in Westminster about the issue.
Mr MacAskill again insisted he had made his decision based on the best advice available.
After the vote, a spokesman for the justice secretary said: "Opposition attempts to politicise the justice secretary's humanitarian decision to send Mr al-Megrahi back to Libya to die have totally backfired."
But earlier, those opposition MSPs mostly wanted to concentrate on the "glaring inconsistencies" in Mr MacAskill's actions and words.
The greatest concern was over his unprecedented and controversial visit to the bomber in Greenock prison.
Labour's justice spokesman, Richard Baker, highlighted the fact Megrahi had been offered the meeting.
"Incredibly, the meeting was not the initiative of Mr Megrahi, but actually first suggested by the Cabinet secretary. Did no warning bells sound before that approach was made about how inappropriate it was?" Mr Baker said.
Questions were again asked about the medical evidence, with four specialists refusing to say Megrahi had less than three months to live and only the prison doctor apparently willing to support that prognosis.
However, the SNP's Dr Ian McKee, a former doctor, said it was not unusual for a GP who knew the patient to give a prognosis and actually be more accurate than "a distant specialist".
Former Scottish Conservative leader David McLetchie questioned Mr MacAskill's claim that a higher power was responsible for Megrahi's terminal cancer, saying it was "out of the Glenn Hoddle school of theology". He also pointed out that the minister was an atheist.
Labour's Elaine Murray, whose constituency includes Lockerbie, said the town still suffered the pain of the night of 21 December, 1988. She added: "Even today, the town struggles under the yoke of being solely associated with the bombing."
In a sign that the continuing controversy over the guilty verdict on Megrahi will not go away, the Nationalist MSP Christine Grahame publicly named the man she believes was responsible for the crime.
She asked why Basel Bushnaq, alias Abu Elias, a resident of Washington DC – who is understood to be a nephew of Ahmed Jibril, of the Popular Front of the Liberation of Palestine command – had not been questioned by police.
However, she refused to publish e-mails she claimed showed that Megrahi had been pressured into dropping his appeal, after a challenge by Conservative Bill Aitken, the justice committee convener.
'Relations damaged for years to come'
THE United States has reacted with fury to revelations that Gordon Brown supported the release of the Lockerbie bomber.
Many in the US believe the release of Abdelbaset Ali Mohmed al-Megrahi was connected to an oil deal with Libya.
And the news that Mr Brown had apparently said one thing to the Libyans and another to Americans has brought accusations of "duplicity" from a former US Justice Department official.
David Rivkin, who worked in both the Reagan and Bush administrations, said the Prime Minister's thinking showed there was "no interest" in keeping promises made to the US that Megrahi would serve his full sentence in Scotland.
He added: "In many respects this explanation is even worse than some last-minute micro-management of the Scottish Government's decision.
"It was clear that the British government at the highest level wanted to please Libya by letting Megrahi get out of prison.
He added: "This will damage US relations with Britain for years to come.
"This is the kind of duplicitous behaviour that most people here do not expect from Britain."
New York's Daily News yesterday carried an editorial entitled "Brown the Betrayer". The newspaper said that, with the revelation that the Prime Minister didn't want Megrahi to die in jail, "the special relationship is now dead".