Opposition MPs argued she has been unduly influenced by her father, former prime minister Thaksin Shinawatra.
Thaksin is a popular but highly controversial political figure who was ousted in a 2006 military coup, fled into exile and recently returned to Thailand.
Paetongtarn's opponents said her administration has improperly favoured the personal and financial interests of her family and her father.
They also accused her of tax evasion and mishandling many of the country's chronic problems including the slumping economy, air pollution, crime and corruption.
Paetongtarn received 319 votes, with 161 voting against her and seven abstaining in the first no-confidence vote she faced since she took office in 2024 after another Pheu Thai prime minister was removed by the Constitutional Court after it found he had committed a serious ethical breach.
Afterward, she posted on social media thanking all parties for taking part in the vote.
"Every vote, whether in support or in opposition, is a force that will drive me and the cabinet to continue to devoutly work for the people," she wrote.
Paetongtarn heads the Pheu Thai Party, the latest in a string of populist parties affiliated with Thaksin.
Thaksin has been at the heart of nearly two decades of deep political divisions pitting a mostly poor, rural majority that supported him against royalists, the military and their urban backers, who accuse him of threatening their status and that of the revered monarchy.
