The nation's House of Commons voted unanimously to ban the practice.
The legislation would make it illegal to have a child undergo the practice or have anyone unwillingly undergo it.
Prime Minister Justin Trudeau's Liberals proposed the measure, though its passage prompted applause on both sides of the aisle.
The bill must now be approved by the upper chamber of parliament, the Senate.
Conversion therapy, which purports to change individuals' sexuality or gender identity, has been widely discredited.
The House passed an earlier version of the bill in June, but it failed to clear the Senate before Mr Trudeau called an election in September.
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