Under the reform, backed by President Cristina Fernandez and passed by 38 votes to 30, members of the board that chooses federal judges will be elected. The measure had already been approved by the lower house of Congress.
The National Chamber of Civil Appeals, the main body of appeals court judges, issued a statement saying the new law "violates the principle of judicial independence."
The reform is a lightning rod for criticism against the president as talk swirls of a possible bid by her supporters to seek a constitutional change to allow her to seek a third term.
Fernandez was re-elected in 2011 but the popularity of the 60-year-old Peronist Party leader has fallen over the last year amid high inflation and discontent over her economic policies.
More than 1 million Argentines took to the streets on April 18 in protest against her government.