Defying it's own rules which disqualify "self-avowed practicing homosexuals" from ordination, delegates at the denomination's Western Jurisdictional Conference in Arizona elected lesbian Revd Karen Oliveto.
The 58-year-old, who is married to deaconess Robin Ridenour, said: "Today we took a step closer to embody beloved community and while we may be moving there, we are not there yet. We are moving on to perfection."
Bishop Melvin Talbert, retired from the Western Jurisdiction, said: "This means our church - at least part of our church - has finally come to the realization that there is no longer any place for exclusion."
President of the United Methodist Council of Bishops said Oliveto's election "raises significant concerns and questions of church polity and unity".
President of Good News, an evangelical United Methodist organisation, Revd Rob Renfroe, described the decision as "pledging non-conformity" with the United Methodist's Book of Discipline.
He said: "If the Western Jurisdiction wanted to push the church to the brink of schism, they could not have found a more certain way of doing so."
The states represented in western jurisdiction are Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming.