"If you can eat ... Bugs Bunny and Bambi, why can't you eat Mr. Ed?" asked state Rep. Charles Morrow, D-Chicago.
The House rejected the legislation Friday on a 60-51 vote.
Horse consumption is already illegal in Illinois, but Cavel International slaughters horses and exports the meat to Europe and Asia, a practice that has animal rights groups crying foul. Belgium-based Cavel is set to reopen soon after a 2002 fire destroyed the plant.
Activists say horses are companions and not bred for slaughter.
But some said many kids who bring cattle and other livestock for show at the county fair also consider those animals companions, but they are eventually slaughtered.
"Sooner or later it must go to the big Cavel plant in the sky. It has to happen, be it a lamb, be it a hawk, be it a steer, be it a horse," said state Rep. Jim Sacia, R-Pecatonica.
State Rep. Bob Pritchard, R-Hinckley, who represents DeKalb, said states cannot legally craft laws affecting interstate commerce. California, however, implemented a similar ban last year, and the courts upheld its legality.
Opponents of the ban also cited the investment the company has made to get back on track. In addition, the plant will employ 40 people and add millions of dollars to the local economy.
"I have been told that it wouldn't take much money to turn this into a cattle slaughterhouse," said state Rep. Robert Molaro, combating claims the ban would devastate the DeKalb economy.
"So in my opinion, this wouldn't cost any jobs," the Chicago Democrat said. The House has shown its distaste for the proposal twice already this session, but the Senate approved the measure with 38 votes after actress Bo Derek visited Springfield last week to support a ban.
Some lawmakers were disgusted that ban supporters brought a movie star to influence votes.
"I thought we were expected to think for ourselves, not to think by celebrity," Morrow said. "I find it insulting that we're now governing by celebrity."
All Central Illinois lawmakers voted against the measure, which is contained in a Senate amendment to House Bill 649.