After seven hours of debate, House Bill 790 passed this evening by a vote of 105-90.
If the Senate passes it, beer and wine could be sold through supermarkets and private businesses.
Governor Tom Corbett has been a strong supporter of liquor privatization, and tonight said "Today is a truly historic day."
He wants to spend the money raised from privatizing to improve public education.
According to the roll call on the House website, only five Republicans crossed party lines by voting "no."