Bush announced no new federal dollars for stem cell research, which supporters say holds the promise of disease cures, and his order would not allow researchers to do anything they couldn't do under existing restrictions.
Announcing his veto to a roomful of supporters, Bush said, "If this legislation became law, it would compel American taxpayers for the first time in our history to support the deliberate destruction of human embryos. I made it clear to Congress and to the American people that I will not allow our nation to cross this moral line."
He vetoed similar embryonic stem cell legislation last July.
His executive order encourages scientists to work with the government to add other kinds of stem cell research to the list of projects eligible for federal funding — so long as it does not create, harm or destroy human embryos.
Democrats, focusing on the potential for cures or treatments of Parkinson's, Alzheimer's and other diseases, made the embryonic stem cell legislation a priority when they took control of the House and Senate in January.
"President Bush won't listen to the more than 500 leading organizations who support the bill including AARP, the American Medical Association and the American Diabetes Association, just to name a few," Senate Majority Leader Harry Reid said.
"President Bush won't listen to the 80 Nobel laureates or his own director of the National Institutes of Health, who all support embryonic stem cell research. Most importantly, President Bush won't listen to the overwhelming majority of Americans who call out for stem cell research."
Reid said he would schedule an override vote "very, very quickly," but not until Wyoming selects a temporary replacement for Republican Sen. Craig Thomas, who died two weeks ago. Democrats do not have enough votes to override Bush's veto.
The stem cell issue has weighty political and ethical implications. Public opinion polls show strong support for the research, and it could return as an issue in the 2008 elections.
Republican presidential hopefuls are split on the scope of federal involvement in embryonic stem cell research. Sen. John McCain of Arizona and former New York Mayor Rudy Giuliani have broken with Bush — and the GOP's social conservatives — in backing the expansion of federal funding for such research. At the Republican debate May 3, Giuliani said he supports such an expansion with limits, "as long as we're not creating life in order to destroy it, as long as we're not having human cloning."
Rivals Mitt Romney and Sen. Sam Brownback of Kansas oppose the expansion. As governor of Massachusetts, Romney tried to stop legislation that encouraged expanded embryonic stem cell research. His veto was overturned.
Most of the Democratic candidates have urged Bush to expand the research.
The president is "deferring the hopes of millions of Americans who do not have the time to keep waiting for the cure that may save or extend lives," Democratic presidential hopeful Barack Obama said.
Sen. Hillary Clinton, R-N.Y., said if she is elected president, she will lift restrictions on stem cell research.
"This is just one example of how the president puts ideology before science, politics before the needs of our families," she said.