US Ambassador Nikki Haley declared that "it is now completely clear that the UN is hopelessly biased against Israel," saying council members were "willing to blame Israel, but unwilling to blame Hamas."
The outcome deepened the deadlock at the top UN body over how to respond to the flareup of violence in Gaza just days after UN envoy Nickolay Mladenov warned that the Palestinian enclave was "close to the brink of war."
Ten countries including China, France and Russia voted in favor of the draft put forward by Kuwait on behalf of Arab countries. Four countries -- Britain, Ethiopia, the Netherlands and Poland -- abstained.
The Kuwait-drafted text had called for "measures to guarantee the safety and protection" of Palestinian civilians in Gaza and the occupied West Bank, and requested a UN report to propose an "international protection mechanism."
Haley told the council the measure was "wildly inaccurate in its characterization of recent events in Gaza" by condemning Israel for the violence.
No support for US rival text
During a second vote, the United States failed to win support for its own rival measure calling on Palestinian militants to halt their protests in Gaza.
Eleven countries abstained, while Russia and two others opposed it.
A draft resolution requires nine votes to be adopted in the 15-member council and no veto from the five permanent members -- Britain, China, France, Russia and the United States.
"This session was another missed opportunity for this council," French Ambassador Francois Delattre said, deploring an "increasingly deafening silence" from the United Nations on the Israeli-Palestinian crisis.
Kuwait's Ambassador Mansour al-Otaibi said the US veto "will increase the sentiment of despair among the Palestinians."
A barrage of rocket and mortars into Israel from Gaza on Tuesday was followed by Israeli strikes on 65 militant sites in the Gaza Strip in the worst flareup since the 2014 war.
Israel has fought three wars in Gaza against Hamas, which the United States considers a terrorist organization.
It was the second time that Haley has resorted to US veto power to block a UN measure on the Israeli-Palestinian conflict.
In December, Haley vetoed a draft resolution that rejected President Donald Trump's decision to move the US embassy to Jerusalem after all 14 other council members supported it.