The Board of Regents voted unanimously against a full merger of the institutions, calling instead for a "strategic alliance."
"The board's recommendation of an alliance should not be seen as a step toward a merger," the regents said in their report, released at an afternoon meeting in College Park. "The board is convinced that maintaining these two exceptional institutions as separate entities is in the best interest of the state."
The move drew quick praise from Baltimore Mayor Stephanie Rawlings-Blake and other city leaders.
The merger's chief proponent, Senate President Thomas V. Mike Miller, did not offer an immediate comment.
The regents approved several measures intended to spur collaboration between the universities, including the creation of a joint center for medical innovation and a provision that would allow top applicants to gain joint admission to College Park and to graduate programs in Baltimore.
They also called for the universities to report their research funding, which totals more than $1 billion annually, as a single sum, a move that could vault the institutions ahead in some national rankings.
Chancellor William E. Kirwan called the proposed alliance a "much more focused and flexible structure" than a merger and said it will allow the universities to act more quickly to build partnerships where they're needed.
Jay Perman, president of the University of Maryland, Baltimore, said the alliance would create "significant value through formal and accountable collaboration while allowing both institutions to keep the autonomy that has made them great."
Though the College Park campus was more supportive of a full merger, President Wallace Loh also praised the plan that emerged Friday.
"It is not either merger or no merger," he said. "There has always been a continuum of opportunity. My position had never been in favor of a merger. I was always in favor of an option in between."
The merger idea came from Miller, a graduate of both institutions, who argued that they could achieve greater prestige and research clout together than they ever could apart.
Miller, who has an undergraduate degree from College Park and a law degree from Baltimore, championed legislation in the General Assembly this year that required the regents to study the issue and submit a report by Dec. 15.
The General Assembly is not required to take any action on the report approved Friday. It could simply accept the recommendations and allow the universities to follow the regents' blueprint.
Kirwan said he had already spoken with many legislators about the content of the report.
"What we've done is very consistent with what I heard from them that they wanted as an outcome," the chancellor said. "I think they have always shown great deference and respect in accepting the board's guidance."
A spokeswoman for Miller said he was still reviewing the report on Friday and did not have an immediate comment.
Kirwan said Miller had expressed satisfaction with many of the collaborations proposed in the report, though the Senate president had reservations about the term "strategic alliance."
"He said an alliance is something that can be broken," Kirwan said.
But the Senate president had said recently that using the term merger was a mistake, because it implied that the College Park campus would absorb its Baltimore counterpart. He said it was never his intention to rob Baltimore's campus of autonomous leadership.