Democratic Sen. Alex Padilla of Los Angeles says he will try again next year.
His SB405 had support from business groups that want to eliminate a patchwork of policies across the state. More than 70 local governments already prohibit such bags.
But some of Padilla's fellow Democrats said the ban would cost hundreds of jobs in plastic bag manufacturing factories.
The bill fell three votes short Thursday. It's the fifth such bill to fail in the Senate.
Padilla argued that plastic bags take years to deteriorate and can endanger wildlife. State officials say only about 5 percent of plastic bags are recycled in California.