The committee voted 6-5 to stop the bill from moving on to the full House.
The vote came after eight hours of testimony in a packed chamber at the State Capitol.
The measure easily passed the Senate last week with three Republicans joining all the Democrats voting for it.
Democrats said Senate Bill 172 could have cleared the House if all members there were allowed to vote.
There were large demonstrations outside the Capitol earlier on Thursday before testimony began.
At one of the rallies outside the Capitol in opposition of the bill, people sang a Catholic hymn - a much more low key demonstration than what was happening on the other side of the building, where dozens of people waved rainbow-colored flags and chanted, "Love for you, love for me, it's about equality!"
Christian Brugger was there and he was an opponent of the bill.
"Mainly because we believe marriage matters and this bill will assign civil benefits to couples of same sex unions as if they were married," he said.
Colorado voters in 2006 passed an amendment saying that marriage is between a man and a woman. Brugger calls Senate Bill 172 "an end around" in an effort to circumvent the intent of the majority of the voters.
"This will assign all of the benefits of marriage to same sex couples," he said.
Rep. Mark Ferrandino (D-Denver), a gay lawmaker and the bill's sponsor told dozens of supporters outside the Capitol that it's only a matter of time before civil unions are allowed.
"In my mind this issue is simple. Everyone should have civil rights," Ferrandino (D-Denver) said. "Whatever the outcome is, know this: Civil unions are not a matter of if. It's a matter of when."
If the bill had passed, couples in civil unions would have had rights similar to married couples, including the ability to be involved in their partner's medical decisions. The bill would have enhanced inheritance rights and made it easier for couples to list each other as dependents on health insurance. The bill would also have addressed circumstances in which children are being raised by two parents but only one is recognized as the legal guardian responsible for child support.
Seven states have passed civil union legislation or similar legal recognitions for gay couples. Hawaii and Illinois were the most recent to pass civil union laws.
Colorado Gov. John Hickenlooper has previously said he supports civil unions. His office read a letter on his behalf during a rally outside the Capitol just before the committee was to hear the bill. Hickenlooper urged lawmakers in the committee to send the bill to a full vote of the House.
"It's pretty simple: What's fair for one person should be fair for the next," he said in the letter. "Everyone, regardless of their sexual orientation, should have the same legal rights."
During sometimes emotional debate in the Senate last week, Democrats cited personal experiences for supporting the bill and said the proposal was a matter of equal rights for everyone. Democratic Sen. Pat Steadman, who is gay, recounted how his father's wife was able to be by his side when he was in the hospital and spoke on his behalf to allow visitors because he was unable to speak after suffering a stroke. Steadman told his colleagues he sometimes wondered what would happen to him if he were ever in the same position as his father.
(KUSA-TV © 2011 Multimedia Holdings Corporation with The Associated Press)