LAC DU FLAMBEAU, Wis. (AP) _ Chippewa Indians rejected a $35.6 million offer to give up traditional spearfishing practices that anger sport fishermen, prompting one tribal leader to remark, ''The Great Spirit won.''

The Indians of the Lac du Flambeau Reservation voted 439-366 Wednesday night against a state of Wisconsin proposal to settle a dispute over a 19th century treaty that gives the tribe rights to fish, hunt and cut timber off their reservation.

The settlement would have paid each member of the Lac du Flambeau band $1,800 cash this year and $1,200 in each of the next 10 years. The $35.6 million, 10-year settlement offer included $15 million in state and federal aid for Indian programs.

''I feel great,'' said tribe member Scott Smith, who joined the drum- pounding, cheering opponents of the treaty outside the center where the votes were counted. ''They saved our rights.''

The Chippewas' annual spearfishing forays, during the spring run of walleye pike, have become the focus of protest by non-Indian sport anglers. They say Indians spearing fish in shallow water have an unfair advantage over others, who must use rod and reel.

The battle heated up this year after the state announced it would reduce walleye pike catch limits for sport anglers. The cut followed a federal court ruling the Chippewa could catch up to 100 percent of the number of the pike which biologists determine can be safely taken from the lakes.

Demonstrations against spearfishing erupted last spring, and 200 were arrested.

Gov. Tommy Thompson called the rejected settlement, which would have required the approval of the Legislature, the best hope of ending friction in northern Wisconsin.

''It's done, it's dead,'' Thompson said. ''It had to be ratified by the tribe or it's done. ... We're going to have to review all of our options.''

Lac du Flambeau Chairman Mike Allen said before the vote that the band wouldn't resume negotiations with the state if the tribe defeated the referendum.

''That's the end of the trail here for us. It's over right now. The people made their choice,'' Allen said today.

He predicted that one consequence of the vote will be more violent protests next spring when tribe members leave the reservation to spearfish again.

''I believe it's going to get worse,'' he said. ''It's been getting worse every year and we anticipate it for this (next) year.''

Tribal attorney James Jannetta announced he was resigning because defeat of the settlement he negotiated was a clear message his services were no longer wanted.

''The Great Spirit won over tonight,'' said Thomas Maulson, a former tribal judge and leading opponent of the settlement.

Federal courts have ruled since 1983 that the state's six Chippewa bands retain the hunting, fishing and gathering rights under 19th century treaties that ceded northern Wisconsin to the federal government.

The Lac du Flambeau, with about 2,500 members, is traditionally the most active Chippewa band in spearfishing.

So far, the state has failed to reach treaty rights settlements with any of the Chippewa bands. The Mole Lake band rejected a proposed settlement in January.

Tribal council member Dave Vetterneck said after the vote: ''The people spoke for what they wanted. As far as I'm concerned, there will be no more negotiations.''

Opponents of the agreement demonstrated outside the tribe center, and security was tight as votes were cast, but there were no disturbances.