A referendum has backed tearing up the country's free movement deal with the European Union by the slimmest possible majority of 50.5% to 49.5%, according to Swiss television SRF.
The right-wing Swiss People's Party forced the vote amid public concern that far more EU workers than anticipated took advantage of the 2000 agreement - with 80,000 immigrants arriving last year.
Brussels has warned the Swiss government - which campaigned for a 'no' vote - that it will have to renegotiate its treaty agreements with the EU, of which the Alpine republic is not a member state.
The row has echoes of the debate in the UK and elsewhere in Europe over the impact of free movement - with David Cameron leading demands for the rules to be tightened within the Union.
Ukip leader Nigel Farage, who led warnings about the impact of the lifting of restrictions on Bulgarians and Romanians to Britain from January, lauded the Swiss vote.
"This is wonderful news for national sovereignty and freedom lovers throughout Europe," he said.
"A wise and strong Switzerland has stood up to the bullying and threats of the unelected bureaucrats of Brussels.
"If Switzerland was in the EU, it would not be allowed a referendum on this issue, and even if it was allowed, the European Commission would likely ignore the result....like they did with the French and Dutch referenda in 2005.
"Mass economic immigration in Europe is a serious matter which has caused great unease because it drives down wages, puts pressure on social services and makes people feel strangers in their own land. It is not a matter of race but of space, of numbers and of skills.
"It is a great thing to be welcomed that the Swiss people now have the freedom to decide the number and skill level of the people who they wish to invite to work or stay in their country.
"Last year, 80,000 immigrants entered Switzerland, a country of 8.1 million. The Swiss in their wisdom have decided enough is enough, and want to do something about it. "
Mr Farage added: "It is becoming more and more obvious to people across Europe that unfettered free movement from the poorest countries on the continent into the more advanced ones with higher living standards and welfare entitlements is unsustainable.
"Were the British people to be given their own referendum on this issue, then the result would be the same - but by a landslide."