The cap and trade measure which cuts greenhouse gas emissions by using free market methods was approved by the state Assembly and Senate by a two-thirds majority.
Brown, a 79-year-old governor of the most populous US state, wants to make California a leader in meeting standards set by the Paris climate accord, especially after President Donald Trump withdrew the United States from the agreement on June 1.
"Tonight, California stood tall and once again, boldly confronted the existential threat of our time," Brown wrote on Twitter.
"Republicans and Democrats set aside their differences, came together and took courageous action. That's what good government looks like," Brown wrote.
In the five year old measure, California set a statewide limit on greenhouse gas emissions, and polluting companies are mandated to buy permits for each metric ton of gas they emit.
These limits decrease over time, and companies that pollute more can buy emission credits from those that pollute less.
"Climate change is real. It is a threat to organized human existence," said Brown.
"This isn't about some cockamamie legacy," he told the members. "This isn't for me, I'm going to be dead. It's for you and it's damn real."
The Assembly also approved a measure to increase air pollution monitoring and increase penalties on polluters.
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