Meeting in an extraordinary session, the more than 600 deputies replaced a 1995 foreign investment law that has lured less overseas capital than the island's Communist leaders had hoped, contributing to sluggish growth.
The afternoon newscast on state television announced the measure's approval. Foreign media were not given access to the closed-door meeting.
Some details of the legislation emerged in official media in recent days. Among other things, it would cut taxes on profits by about half, to 15 percent, and make companies exempt from paying taxes for the first eight years of operation.
An exception for companies that work in the exploitation of natural resources, such as nickel or fossil fuels, would establish taxation rates in such cases as high as 50 percent.
Meanwhile, many foreigners doing business with the island would be exempt from paying personal income tax.
Wholly foreign-owned investment projects would be explicitly allowed, something that is essentially unheard of here.
Foreign investment will reportedly be allowed in all sectors except health care and education.
The investment law is a fundamental part of President Raul Castro's package of reforms, begun in 2008 with the stated goal of "updating" Cuba's economic model.
Hundreds of thousands of Cubans are now legally working independently of the state in a nascent private sector, though authorities say they are not abandoning socialism.
The body usually meets twice a year, in July and December. Castro announced Saturday's extraordinary session late last year.
Cuba's economy expanded 2.7 percent last year, below targets and weak for a developing nation.