Uruguay's congress has approved a bill which would allow civil unions for both gay and unmarried straight couples.
Mexico City also allows same sex civil unions
It is the first country in Roman Catholic-dominated Latin America to approve such a measure nationwide.
The Uruguayan President, Tabare Vazquez, is now expected to sign the bill into law.
Under its provisions, couples who have lived together for five years will have rights similar to those already enjoyed by married couples.
Couples will have to register their relationship with authorities to gain the cohabitation rights - covering areas such as inheritance, pensions and child custody - and will also be able to formalise the end of their union.
Several cities across Latin America, including Buenos Aires and Mexico City, have recently adopted similar measures.
Gay marriage remains illegal in Uruguay.