The ban on phthalate makes California the first U.S. state to impose severe limits on a chemical that is widely used in baby bottles, soft baby books, teething rings, plastic bath ducks and other toys, said Assemblywoman Fiona Ma, the bill's author.
"I think parents will be comforted that when they buy one of these chewy products it will be safe," Ma told The Associated Press on Sunday after the bill was signed into law.
Beginning in 2009, any product made for young children that contains more than one tenth of one percent of phthalates cannot be made, sold or distributed in California.
The states of Oregon, Maryland and New York are also considering bills that would ban phthalates in certain products.
Phthalates have been banned by the European Union and at least 14 other countries after studies found that the chemical interferes with hormones and might lead to early puberty, reproduction defects and other health problems.
Representatives from the toy industry have said the amount of toxic chemicals and exposure periods for children's toys are so low that they aren't a health hazard.
Although Gov. Arnold Schwarzenegger signed the phthalate ban, he said in a signing statement that he did not believe a "product by product" ban was the most effective way to craft state chemical policy.