The conservative governor said she could not sign a bill that was not only unneeded but would damage the state's improving business environment and divide its citizens.
Senate Bill 1062 had set off a national debate over gay rights, religion and discrimination and subjected Arizonato blistering criticism from major corporations and political leaders from both parties.
Loud cheers erupted outside the Capitol building immediately after Brewer made her announcement Wednesday night.
Brewer pushed back hard against the GOP conservatives who forced the bill forward by citing examples of religious rights infringements in other states.
"I have not heard one example in Arizona where a business owner's religious liberty has been violated," Brewer said. "The bill is broadly worded and could result in unintended and negative consequences."
And she chastised the GOP-controlled state Legislature for sending her a divisive bill instead of working on a state budget that continues her economic expansion policies or an overhaul of Arizona's broken child welfare system, her top priorities.
In a reference to the gay marriage debate that has expanded across the nation, she reached out to the religiousright with sympathy but said 1062 was not the solution.
"Our society is undergoing many dramatic changes," she said. "However, I sincerely believe that Senate Bill 1062 has the potential to create more problems than it purports to solve. It could divide Arizona in ways we cannot even imagine and nobody could ever want."
The bill was designed to give added protection from lawsuits to people who assert their religious beliefs in refusing service to gays or others who offend their beliefs. But opponents called it an open attack on gays that invited discrimination.
Arizona was thrust into the national spotlight last week after both chambers of the state legislature approved it. As the days passed, more and more groups, politicians and average citizens weighed in against Senate Bill 1062. Many took to social media to criticize the bill.
Prominent business groups said it would be another black eye for the state that saw a national backlash over its 2010 immigration-crackdown law, SB1070, and warned that businesses looking to expand into the state may not do so if bill became law.
Companies such as Apple Inc. and American Airlines and politicians including GOP Sen. John McCain and former Republican presidential nominee Mitt Romney were among those who urged Brewer to veto the legislation. The Hispanic National Bar Association cancelled its 2015 convention in Phoenix.
In addition, three Republicans who had voted for the bill reversed course and two said it was a mistake. They said in a letter to Brewer that while the intent of their vote "was to create a shield for all citizens' religious liberties, the bill has been mischaracterized by its opponents as a sword for religious intolerance."
Enough lawmakers have said they're against the bill to ensure there will be no override of the governor's veto.
SB 1062 allows people to claim their religious beliefs as a defense against claims of discrimination. Backers cite a New Mexico Supreme Court decision that allowed a gay couple to sue a photographer who refused to document their wedding, even though the law that allowed that suit doesn't exist in Arizona.
Sen. Al Melvin, a Republican who is running for governor and voted for the bill, said he was disappointed by theveto.
"I am sorry to hear that Governor Brewer has vetoed this bill. I'm sure it was a difficult choice for her, but it is a sad day when protecting liberty is considered controversial," Melvin said.
Democrats said it was a veiled attempt to legally discriminate against gay people.
Rep. Ruben Gallego, D-Phoenix, said he would remain vigilant of other legislation that could also target gays.
"The effect is that again we got a black eye," Gallego said. "But it also shows that Arizona can stand united"
The Center for Arizona Policy helped write the bill and argued it was needed to protect against increasingly activist federal courts and simply clarifies existing state law. It accused opponents of mischaracterizing the bill and threatening boycotts of Arizona.
"It is truly a disappointing day in our state and nation when lies and personal attacks can overshadow the truth," said Cathi Herrod, the leader of the group.
Similar religious-protection legislation has been introduced in Ohio, Mississippi, Idaho, South Dakota, Tennessee and Oklahoma, but Arizona's plan is the only one that has been passed by a state legislature. The efforts are stalled in Idaho and Kansas, and was withdrawn in Ohio Wednesday among concerns it would have unintended consequences.
The push in Arizona comes as an increasing number of conservative states grapple with ways to counter the growing legality of gay marriage. Arizona has a ban on gay marriage.
Federal judges have recently struck down those bans in Utah, Oklahoma and Virginia, but those decisions are under appeal.
On Wednesday, a federal judge declared Texas' ban on gay marriage unconstitutional, but he left it in place until an appeals court can rule on the case.
Associated Press reporter Astrid Galvan in Phoenix, Brady McCombs in Salt Lake City and Jesse Holland in Washington contributed.
Follow Bob Christie at http://twitter.com/APChristie
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.