The largely Muslim oil-rich republic has sought broader autonomy in the Russian Federation since the collapse of the Soviet Union, although it has curtailed its aspirations since President Vladimir Putin came to power in 2000 and moved to step up central control over the regions.
Thirteen members of the Federation Council supported the agreement, which required 90 votes to be passed, 93 voted "against" and 15 abstained.
The Federation Council speaker said the agreement could set a dangerous precedent for other regions to follow and would be in breach of the principle of equality among Russian Federation subjects.
"Approving the agreement would have brought us back in the 1990s, the notorious 'parade of sovereignties,'" Sergei Mironov said referring to the Boris Yeltsin era of transitional chaos and the start of a prolonged bloody conflict in Chechnya.
The agreement stipulates that the federal government and Tatarstan's Cabinet negotiate a deal allowing Tatar authorities to have a greater say in decisions involving economic, environmental, cultural and other regional issues.
The document also guarantees that a leader of Tatarstan, whose candidacy is proposed by the Russian president, must speak the Tatar language in addition to Russian. The republic would also have the right to issue internal identification papers with an insert in Tatar.
Russia's lower house of parliament approved the agreement February 9, saying special rights for the republic were due to its "environmental, economic, cultural and other specific features."
Relations between the RF and Tatarstan are regulated by an interim inter-government agreement at the moment.
Putin has ordered laws to cut constituent regions' authority, including those cancelling direct regional gubernatorial and presidential elections, which have been criticized as undemocratic by Russian and foreign rights groups.
