Austria has blocked the accession of Romania and Bulgaria into Schengen, the passport-free area that has abolished border checks between the vast majority of EU member states.
The Netherlands supported Romania's bid but opposed Bulgaria's.
Croatia, however, received unanimous backing and will join the Schengen Area as of January 2023.
"Last step completed!" tweeted the Croatian Permanent Representation in Brussels.
The votes took place in Brussels on Thursday afternoon during a high-stakes meeting of interior ministers.
The negative conclusion, which was widely expected, represents a painful political defeat for both Romania and Bulgaria, who joined the European Union six years before Croatia.
The European Commission, in charge of assessing Schengen candidacies, has said the two countries are ready to become part of the passport-free area since at least 2011.
The executive released another unconditional endorsement just last month, while the European Parliament passed a new resolution denouncing the exclusion as "discriminatory."
Over the past few years, countries that were previously opposed to Schengen enlargement, such as Finland, Denmark, Sweden and Belgium, softened their positions, increasing the odds of a positive outcome.
France and Germany, the bloc's most influential states, voiced their support for Romania and Bulgaria this year.
But none of this was enough to overcome the Austrian and Dutch reticence.
As Schengen accession requires unanimity, the small minority managed to block the whole process.
Austria's opposition, which has surprised many in Brussels as it only emerged in recent weeks, is based on a new influx of asylum-seekers through the Western Balkan route.
The country says it has received 75,000 unregistered
Read more on euronews.com