After the Government was defeated on the amendment by 308 votes to 297, a majority of 11, Tom Brake for the Liberal Democrats said it was "right Parliament has taken back control from a wayward Prime Minister and this failing Conservative Government".
Downing Street had tried to see off the Grieve amendment by promising the PM would "seek to provide certainty quickly" if she loses the vote on her under-fire deal next week, as expected.
More worryingly for Mrs May, the result means that a vote on any Plan B presented by her will be amendable, meaning Tory.
"He is not impartial on this or frankly any other issue".
May has refused to retreat from her unpopular deal, which envisages close trading ties with the European Union after leaving in March, pressing ahead with the vote that she looks set to lose after failing to win over her nominal Northern Irish allies.
Several MPs challenged the Speaker with points of order, with Tory Brexiteer Peter Bone asking for an explanation as to why, when he had attempted to propose an amendment to the same motion, he had been refused by the Table Office, saying "I was told it would be totally out of order and there would be no other amendments filed".
May's fellow Conservative Party colleagues who support a hard Brexit, which would entail cutting nearly all ties to the EU. Lawmakers would have the power to amend that plan.
"The real question for Members of Parliament who voted to give the public a say through the European referendum in 2016, who voted in large numbers to trigger Article 50, is the effect of triggering Article 50 is you either have a deal and the EU have been clear that the only deal on the table is the PM's deal".
Under the EU's backstop proposal, Northern Ireland would have stayed in the single market and customs union while the rest of the United Kingdom withdraws, while Mrs May wanted Northern Ireland treated the same as the rest of the UK.
Ms. May has insisted that if her deal is rejected, the country would be entering "uncharted waters", and she has urged her opponents to come up with an alternative.
The Conservative MP Mark Francois, a vice-chair of the pro-Brexit European Research Group, said: "I have never known any occasion where the Speaker has overruled a motion of the House of Commons ... why are you overriding a motion of the house?"
But the vote did carry symbolic weight: Parliamentarians are pushing back on a no-deal scenario.
"I am clear in my mind that I have taken the right course".
Environment Secretary Michael Gove told Cabinet that those considering rejecting Mrs May's agreement in the hope of securing a better deal were like swingers in their mid-50s waiting for film star Scarlett Johansson to turn up on a date.
"We're all focused in the government on winning parliamentary support in the vote that's coming up next week", he told reporters as he arrived at the meeting in Brussels.
Eurosceptic Conservatives and Northern Ireland's tiny Democratic Unionist Party (DUP), which props up May's government, fear it could tie London to Brussels for years to come. The proposals would give Northern Ireland a veto over introducing any new areas of law and policy if the so-called Irish backstop provision in the Brexit deal is triggered.
The government also lost on Tuesday night when another amendment curbing its financial powers in the event of "no-deal Brexit" without authorisation from parliament.