President Anibal Cavaco Silva said he would not veto the bill because majority liberal lawmakers would only overturn his decision. The country must focus instead on battling a crippling economic crisis that has increased unemployment and deepened poverty, he said.
"Given that fact, I feel I should not contribute to a pointless extension of this debate, which would only serve to deepen the divisions between the Portuguese and divert the attention of politicians away from the grave problems affecting us," Cavaco Silva said.
He said he was setting aside his "personal convictions," though he did not elaborate and did not take reporters' questions.
The country's parliament passed the Socialist government-backed bill in January, with the support of all of Portugal's left-of-center parties, who together have a majority. Right-of-center parties opposed the measure and demanded a national referendum.
Elsewhere in Europe, gay marriage is permitted in Belgium, the Netherlands, Spain, Sweden and Norway. As well, five U.S. states and Washington, D.C., have legalized same-sex marriage, as have Canada and South Africa.
Cavaco Silva's announcement came three days after Pope Benedict XVI left Portugal. During his four-day visit, which attracted hundreds of thousands of people, the pontiff said same-sex marriage, and abortion, were some of the most "insidious and dangerous" threats facing the world.
Socialist Party spokesman Vitalino Canas welcomed the president's decision.
"This is a memorable moment," he said. "This is a great step forward for us politically and as a society."
Antonio Serzedelo, the president of lobby group Opus Gay, congratulated the head of state for placing "ethical responsibility above personal opinions."
Portugal is nearly 90 percent Catholic. However, only around 2 million of its 10.6 million people describe themselves as practicing Catholics and Portugal has drifted away from the church's teachings.
The current Socialist government has defied the church before. It passed a law in 2007 allowing abortion. The following year, it introduced a law allowing divorce even if one of the spouses objected. It has argued that the legislation is part of Portugal's "modernization."
The new law removes the previous legal stipulation that marriage is between two people of different sexes.
Portugal's Constitutional Court validated the bill's legality last month.
Like neighboring Spain, which introduced same-sex marriages four years ago, previous efforts in Portugal to introduce gay marriage ran into strong resistance from religious groups and conservative lawmakers.
Gay rights advocates have said they will continue to fight for gay couples' parental rights, including adoption, which are not included in the law.
Portugal lifted a prohibition on homosexuality in the early 1980s. In 2001, it passed a law allowing "civil unions" between same-sex couples, which granted couples certain legal, tax and property rights. However, it did not allow couples to take a partner's name, nor inherit his or her possessions or state pension.