The 40-seat Shura Council, the upper parliamentary chamber appointed by the king in the Gulf state, unanimously approved an amendment to Article 105, members of the council told AFP.
The amendment drops a clause limiting military trials to members of the armed forces or other security branches. Civilians charged with "damaging public interest" or with terrorism, a vague legal term, could now face courts martial.
Sunni-ruled Bahrain last month marked six years since protests demanding constitutional reform in the Shiite-majority kingdom erupted in the capital Manama.
King Hamad bin Issa al-Khalifa, whose family has ruled Bahrain for two centuries, declared a three-month state of emergency in 2011 during which special military courts were established to try civilians.
Sunday's move comes two weeks after approval by parliament's elected lower chamber, and has sparked concern among rights activists for Bahraini civilians -- including those already in detention.
Signup to our newsletter and follow us on Facebook and Twitter!
"We are concerned that they will choose someone to make an example of," Said Yousif al-Muhafdha, vice-president of the non-governmental Bahrain Center for Human Rights (BCHR), told AFP.
Leading Shiite cleric Issa Qassem, who was stripped of his Bahraini citizenship last year, could be one such example, according to Muhafdha.
Qassem is currently on trial on a string of charges which include inciting unrest. His citizenship was revoked over charges that he incited religious tensions.
Hundreds of Shiite protesters including high-profile opposition leaders have been arrested since 2011, as Bahraini authorities make sweeping use of counter-terrorism legislation.
Prominent Shiite human rights activist Nabeel Rajab, a BCHR founder, is also in custody facing trial on a list of charges, including spreading "false information" about Bahrain.
Authorities in the small but strategic archipelago state have accused Shiite-dominated Iran of meddling in the domestic affairs of Arab countries in the Gulf.
Iran has consistently denied the charge.