The highly controversial bill passed with 315 votes for, 62 against and two abstentions, after three days of chaotic debates in which some opposition MPs were suspended, while others walked out, AFP reported.
The bill will pass into law once it is signed by Museveni.
Under current laws, Museveni, 73, would not be eligible to run for office again in 2021 as candidates over 75 are not allowed.
The new bill re-introduces presidential term limits, which were scrapped with the introduction of multi-party politics in 2005.
However, this will only come into force following the next election – meaning Museveni could serve two more terms.
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