The Scottish Parliament voted by a margin of 93 to 30 not to grant a Legislative Consent Motion (LCM) to the keynote Brexit legislation following the First Minister's warnings that it would lead to a Westminster "power grab".
The Scottish vote came as Ms May's cabinet subcommittee on Brexit met amid enduring differences over Britain's customs relationship with the European Union after Brexit.
While the Scottish Parliament's refusal to back the bill will not legally prevent ministers from pressing ahead, it will increase the tensions of the impact of Brexit on devolved settlements across the UK.
Imposing powers on Scotland would be unprecedented and fuel Sturgeon's demands for a second independence referendum, potentially providing the Scottish National party with a further justification for staging one.
It will be up to ministers in London to decide then if those powers should go to the Scottish and Welsh parliaments, or if they should become part of United Kingdom wide common frameworks.
"The amendments themselves are extremely problematic because of the definition of a consent decision, which effectively means that if the Scottish Parliament votes to refuse consent, the United Kingdom government can in effect take that as a "green light" to act anyway", the source added.
It will be the first time since Holyrood was created.More news: DeAngelo Hall Retires from NFL After 14-Year Career
The problem is that clause 15 of that bill automatically transfers those new powers to Whitehall.
- What is legislative consent and why does it matter anyway?
Scottish Brexit spokesman Neil Findlay said: "Labour stands ready to work with other parties to find a solution". The UK says it will consult the Scottish government on all changes to those policies, and try to seek agreement.
"The solution, as this Parliament has agreed, is straightforward".
"Obviously, there'll be an opportunity for further debate and discussion in parliament but also I hope there'll be the opportunity for debate and discussion between the two governments. That is for the UK Government to remove the clause that fundamentally undermines devolution and to proceed on the basis of agreement".
"There will be different opinions as to whether we should do that now or in five years or ten years' time, but with that body of opinion, a constitutional option like independence is not going to be off the table", she said.
"There is a real risk of a no deal Brexit and that would be pretty catastrophic", Sturgeon said.