"New Jersey will soon no longer make criminals out of our very sick and terminally ill," said Assembly co-sponsor Reed Gusciora.
The legislation allows for dispensaries to be set up around the state where patients with prescriptions can access the drug. The state Health Department will license and monitor the dispensaries.
Growing marijuana at home and driving after using the drug remain illegal under the new law.
Gusciora, a Democrat, said New Jersey's medical marijuana law is the strictest in the country and will serve as a model for other states.
Assembly co-sponsor Joan Voss called the law "a moral and commonsense approach" to debilitating illnesses. She said marijuana has been shown to alleviate pain and suffering when other drugs can't.
Other states that have already removed criminal penalties for medical marijuana are: Alaska, California, Colorado, Hawaii, Maine, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington.
The bill is one of 55 Corzine signed while working privately in Newark on Monday. Gov.-elect Chris Christie will be sworn in Tuesday.
Earlier, Corzine signed a measure ending state control of the City of Camden after eight years.
The state has been overseeing financial affairs of the impoverished city since pumping tens of millions of dollars into a bailout in 2002. The law returns control of the city's day-to-day operations to the newly elected mayor, former state Sen. Dana Redd. The state will retain some oversight.
Corzine said Camden city government has regained the public's trust and is again able to deliver essential municipal services. The legislation abolished the chief operating officer position.
Corzine also signed legislation requiring restaurant chains to list calorie counts of selections sold on their menus, increasing transit funding for senior citizens and the disabled, requiring the public reporting of infection rates at surgical centers, and extending until March 16 the date his successor must deliver his 2011 budget address.
A package of bills providing educational, addiction and jobs training services to inmates before they leave prison was signed despite Christie's to any new laws requiring additional spending.
New Jersey faces a budget deficit of at least $8 billion for the fiscal year that begins in July.
The bills Corzine signed Monday run the gamut of concerns, from requiring continuing education for licensed professional engineers to denying abusive spouses the right to determine how their partner's remains are disposed of.
The law mandating calorie counts affects restaurant chains with more than 20 locations nationally, and, according to the governor, is an essential ingredient for people seeking healthier lifestyles.
"One of the best ways to improve our health and well being is to deal directly with obesity and proper eating," Corzine said in a statement. "This legislation is a clear step in that direction, as it will allow New Jerseyans to know the calorie content of the food they are eating at these establishments."