The Senate passed the legislation 52-3, one day after it was overwhelmingly approved in the other chamber. Gov. Pat Quinn promised to sign it, calling the legislation a "shot in the arm for many communities."
The legislation was crafted with the help of industry and some environmental groups — an unusual collaboration that has been touted as a potential model for other states.
Legislation sponsor Mike Frerichs, a Champaign Democrat, said stakeholders "sat down for hundreds and thousands of hours" to hammer out the issue.
"These are tough regulations that are going to protect and preserve our most valuable resources in our state," he told floor members. "We are going to increase home produced energy in our state in one of the most environmentally friendly ways possible."
While proponents have said hydraulic fracturing, or "fracking," would generate tens of thousands of jobs, opponents have been pushing for a two-year moratorium to allow more time to examine health and environmental impact. They are worried fracking could cause pollution and deplete water resources.
"This bill was written by industry and parties that have a vested interest," said Annette McMichael, a property owner in Johnson County who belongs to a coalition that opposes fracking. "We have no say in our own water. ... We are totally helpless."
Despite the numerous protests by her group, Southern Illinoisans Against Fracturing Our Environment, and others — one woman was forcibly removed from the House chamber on Thursday after the vote — there was little opposition to the measure on the floor. Senators on both sides of the aisle praised the compromise.
"This could be a bright economic future for many, many Illinoisans," said Sen. Kirk Dillard, a Hinsdale Republican.
Fracking uses high-pressure mixtures of water, sand or gravel and chemicals are used to crack rock formations deep underground and release oil and natural gas.
Among the provisions in the proposed legislation are requirements that drillers disclose the chemicals they use and that they test water before and after fracking. Companies also would be liable for any water pollution.
Sen. Mattie Hunter, who was among the few who voted against the legislation, said in a statement that the state should "halt fracking practices and allow for a task force to complete concrete, comprehensive evaluation of this highly controversial industry moving further." The Chicago Democrat had introduced a measure that would put a temporary ban on the practice.
Sen. Sue Rezin, a Morris Republican described the legislation as having "the highest environmental regulations in the entire country."
Energy companies are eyeing the New Albany shale formation in southern Illinois, where they believe there are significant oil reserves 5,000 feet or more below the surface.
While the measure passed easily in both chambers, the road there wasn't easy. An amendment requiring energy companies to hire a state-licensed water well driller delayed the vote for more than a month before industry and unions reached a compromise that gives drillers a break on extraction taxes if at least half of their employees are from Illinois.
Two bills proposing a moratorium were offered, but neither gained traction.
Opponents say the regulatory legislation would leave Illinois communities with no control over the practice.
But others felt it was the best the state could do. State Sen. Don Harmon, an Oak Park Democrat said it was "about as good of a regulatory bill as we could offer."
"God willing," Harmon said, "it's good enough."
The bill is SB1715.
Associated Press writer Sophia Tareen contributed to this report.