Britain had sought to include in the measure renewing sanctions on Yemen an expression of "particular concern" from the Security Council over a UN report that found Iran had violated the 2015 arms embargo on Yemen.
The report by a UN panel of experts in January concluded that Iran was in violation after determining that missiles fired by the Huthis at Saudi Arabia last year were made in Iran.
The text, which was backed by France, other European countries and Kuwait, won 11 favorable votes at the 15-member Security Council but was blocked by Russia's veto.
China and Kazakhstan abstained, while Bolivia also voted against the measure.
Nine votes and no vetoes from the five permanent council members — Britain, France, China, Russia and the United States — are required to adopt resolutions at the Security Council.
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After hours of negotiations in a bid to reach a compromise, Russia made clear it had strong reservations about the findings of the UN report and would not support a draft resolution that mentioned them.
"We cannot concur with uncorroborated conclusions and evidence which requires verification and discussions within the sanctions committee," Russian Ambassador Vassily Nebenzia told the council.
While the report found that Tehran had violated the embargo by failing to block the shipments, the experts said they were unable to identify the supplier.
Nebenzia warned that taking aim at Iran could have had "dangerous destabilizing ramifications" in the Middle East by exacerbating tensions between Shiites and Sunnis.
After the veto, the council unanimously adopted a Russian-drafted measure that extended for one year the sanctions regime against Yemen, but that text made no mention of Iran.
Iran has repeatedly denied arming the Huthis in Yemen, despite claims by the United States and Saudi Arabia that the evidence of an arms connection is irrefutable.
US Ambassador Nikki Haley released a statement accusing Russia of shielding Iran and warned the United States would consider other ways to take action against Tehran.
Russia resists Western bid to condemn Iran at UN over Yemen arms
"Today, Russia protected the terrorist-sponsoring regime in Iran," said Haley, who was traveling to Honduras.
"If Russia is going to use its veto to block action against Iran's dangerous and destabilizing conduct, then the United States and our partners will need to take actions against Iran that the Russians cannot block."
Haley has taken a hawkish stance on Iran, accusing Tehran of sowing instability in the Middle East and failing to live up to its commitments under the landmark 2015 nuclear deal.
Russia, which has traditionally friendly relations with Iran, is providing military support along with Tehran to Syrian President Bashar al-Assad's forces.
Iran's mission to the United Nations charged that the United States and Britain had pushed an "unwarranted draft resolution" to advance an anti-Iran political agenda.
Iran "categorically rejects allegations regarding arms transfer to Yemen," said a statement from the mission that described the draft resolution as an attempt to "distract" the world's attention from the "catastrophic humanitarian situation" in Yemen.
A Saudi-led coalition supporting Yemen's government has been fighting the Huthis since 2015 in a war that has led to what the United Nations describes as the world's worst humanitarian crisis.
An alarming 17 million people in Yemen — 60 percent of the total population — are in need of food aid, of whom seven million are on the brink of famine because of the conflict, according to the United Nations.
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