In the first reading, 51 lawmakers in the 141-seat parliament voted in favor of legalization and two against, with seven abstentions.
According to EU law, animals in Lithuania and other member countries must be stunned before slaughter.
Poland: Kosher meat industry suffers blow / Reuters
With beef consumption falling in Europe, Polish abattoirs saw Israel and Arab countries in Middle East as best opportunity for growth with exports worth €1 billion. But parliament vote against ritual slaughter has dealt lethal blow to booming industry
Kosher and halal slaughter require that an animal be killed by slitting its throat without first being stunned.
Two more parliamentary votes and a presidential signature are needed to approve the law that would exempt religious communities from the requirement.
Lithuania's tiny Jewish community on Tuesday welcomed the move.
"We would be pleased if the law is adopted. It could encourage exports and would also be important for the local community," community leader Faina Kukliansky told AFP.
Rabbi Pinchas Goldschmidt, president of the Conference of European Rabbis (CER), commented: "I welcome this long overdue announcement from Lithuania’s parliament. We urge the Polish government to take note and we will continue to work with other countries urging them to follow Lithuania and introduce similar legislation."
The Jewish and Muslim communities each number around 3,000 people in the Baltic nation of three million people, which joined the European Union and NATO in 2004 and currently holds the rotating EU presidency.
Ritual slaughter was banned in EU neighbor Poland on January 1 after its Constitutional Court deemed it incompatible with animal rights legislation.
Polish farmers and exporters of meat to Israel and Muslim countries exported up to €350 million ($460 million) worth of kosher and halal meat a year before the ban.