The legislation, signed Friday night, grants same-sex couples in California nearly all the same rights and responsibilities as married spouses and solidifies Davis' reputation as a champion of gay rights.
"A family is a family not because of gender but because of values, like commitment, trust and love," Davis said to cheers from the standing-room only crowd at San Francisco's Gay, Lesbian, Bisexual and Transgender center.
With gays and lesbians among the most reliable Democratic voters, Davis has worked hard to cast himself as the nation's most gay-friendly govenor, especially since the recall campaign began.
The position is hardly risky in a state where support for gay rights is strong. A recent Field Poll found 72 percent of California voters surveyed supported expanded rights for same-sex couples.
"Three more years! Three more years!" the overflow crowd cheered as the governor appeared.
"Can you travel with me? Can I take you with me everywhere I go?" joked Davis.
But not everyone in the room was supportive — a representative of Republican state Sen. William Knight passed through the crowd, warning that a legal challenge would be filed Monday against the law.
The new law falls short of a complete endorsement of "gay marriage." But it does expand the rights of gay couples in areas ranging from health coverage and parental status to property ownership and funeral arrangements. It gives both partners in a relationship equal status as parents if they have or adopt a child together, and allow them to seek child support and alimony.
The legislation includes the right for people registered as domestic partners to be covered under each other's car insurance plan, to take extended leave from work to care for a partner, and exempts them from estate and gift taxes. After a partner's death, it gives them the authority to consent to an autopsy, donate organs or make funeral arrangements.
The law, authored by Assemblywoman Jackie Goldberg, a Democrat from Los Angeles, also places greater legal responsibilities on domestic partners. For instance, they will be responsible for their partner's debts.
The law won't take effect until January 1, 2005, giving couples who don't want such commitments time to opt out by withdrawing their registration as domestic partners.
National gay rights advocates say the legislation puts California nearly on par with Vermont, which created a system of civil unions for same-sex couples.
The main legal difference is that California same-sex couples still won't be able to file state income taxes jointly, as is possible in Vermont.