After almost three weeks of debate, the 18-article package -- known as the "power bill" -- was approved by 339 member of the Parliament early Saturday morning, Anadolu reports.
The new Constitution will now be put to referendum vote, likely to be held in April.
Prime Minister Binali Yildirim, who also chairs Erdogan's ruling Justice and Development (AK) Party, congratulated lawmakers for passing the constitutional changes according to Anadolu.
"People will have the final say," Yildirim said.
If the referendum passes, the reforms will turn Turkey's parliamentary system into a presidential one, effectively consolidating the power of three legislative bodies into one executive branch. It will abolish the role of Prime Minister while granting authority to the President to issue law, declare states of emergency, dismiss Parliament and to appoint ministers, public officials and half of the senior judges.
The bill would also allow Erdogan -- who served as Prime Minister from 2002 to 2014 before becoming President -- to extend his term in office until at least 2029.
The role of President is largely ceremonial under the current Constitution. In order to become President in the new system, Erdogan would have to be reelected after the constitutional changes kick in, possibly triggering snap elections.
Anadolu reports that changes to the Constitution require a simple majority, or 51 percent, in the referendum.
Opponents fear the reforms will give too much power to Erdogan.
The main opposition leader for the Republican People's Party (CHP), Kemal Kilicdaroglu was quoted by Anadolu as asking Turkish citizens to oppose the referendum.
"The mistake that has been done in the Parliament can be revoked by the people."
Earlier in the week, Aylin Nazliaka handcuffed herself to a microphone and refused to leave the podium. She sparked a brawl between Turkey's female lawmakers after she sought to "deliver a message to the world."
Nazliaka claimed that as an independent lawmaker she was not given a voice and in her protest called on other female members of the opposition to support her, according to state media Anadolu.
Punches were thrown and one lawmaker with the CHP opposition party was hospitalized after she reportedly lost her prosthetic arm in the fracas, Anadolu reported.
It was the second time that lawmakers were seen brawling inside the Parliament since they began debating the controversial bill.
Since an attempted coup in July, Erdogan has led an intense crackdown on government critics and those with alleged ties to US-based cleric Fethullah Gulen, whom Turkey blames for the coup attempt.
Hundreds of military officers have been dismissed, roughly 11,000 teachers were suspended and many media organizations were shut down.
During a meeting of local leaders at the presidential palace in Ankara on Thursday, Erdogan said 43,000 people have been arrested and 95,000 fired from state posts in relation to the coup attempt.
CNN's Gul Tuysuz contributed to this report.
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Turkish lawmakers approve bill boosting Erdogan's power - CNN