The resolution would have asked Congress to allow Guantanamo prisoners who have been cleared of wrongdoing to resettle in the U.S. - and invited "one or two" of them to live in Berkeley.
The measure lost in a 4-1 vote, with four abstentions, late Tuesday.
At least two other U.S. cities - Amherst and Leverett in Massachusetts - have approved similar resolutions aimed at clearing the way for Guantanamo detainees to come the U.S. after their release from the American detention facility in Cuba.
"These men have suffered immensely," said Cynthia Papermaster, who heads Berkeley No More Guantanamos. "It's the right thing for all U.S. citizens to say, 'We're sorry for what happened to you. If you want to come here, we have a place for you.'"
Papermaster, a Berkeley resident who asked the council's Peace and Justice Commission to consider the measure, said former detainees would be sponsored by volunteers and nonprofit groups, and no city money would be used to support them.
City Manager Phil Kamlarz recommended that the council take no action, saying "federal law explicitly prohibits the transfer of Guantanamo detainees to the United States."
Councilman Gordon Wozniak, who voted against the resolution, said the resolution is an empty gesture that takes attention away from more pressing issues facing the city.
"I think it distracts the council from the local business that we actually have control over," Wozniak said.
Danny Gonzales, of the group Move America Forward, told the council he opposed bringing Guantanamo detainees to Berkeley.
"Just because they haven't been charged and convicted of a crime doesn't mean they're innocent," he said. "It's dangerous. Don't bring them here."
The resolution singled out two Guantanamo detainees who have been cleared of wrongdoing, but don't want to return to their home countries because they fear persecution - Ravil Mingazov, a Russian ballet dancer, and Djamel Ameziane, an Algerian chef.
Separately, the city council approved a resolution that calls for the "immediate end to the cruel, inhuman, and degrading treatment" of Pfc. Bradley Manning, the Army private accused of leaking classified government documents to the anti-secrecy website WikiLeaks.
The measure asked the U.S. government to improve the pretrial confinement conditions of Manning, who is being held in a Marine Corps brig in Quantico, Virginia.
The Pentagon has denied mistreating Manning. A Marine Corps spokesman has said the military is keeping Manning safe, secure and ready for trial.
In December, the city council indefinitely postponed a vote to declare Manning a hero. Some said the move was premature because Manning has not admitted to being the source of the leaks.