Governor Arnold Schwarzenegger has broken ranks with his party to back a proposal to fund embryonic stem cell research with California state money.
Schwarzenegger says California should be a biotech industry leader
The initiative, known as Proposition 71, would provide scientists with about $3bn over 10 years and would cost the state a total of up to $6bn.
Residents will vote on the measure in November. Opinion polls suggest most Californians support the proposal.
But many Republicans oppose the science because it involves destroying embryos.
Mr Schwarzenegger's decision will put him on a collision course with his own party and the White House, says the BBC's Daniel Griffiths in Washington.
The issue has become increasingly important in the presidential election campaign, especially since the death of paralysed actor Christopher Reeve, a passionate supporter of the science.
President George Bush has already placed limits on federal spending on stem cell research. His Democratic opponent, John Kerry, says he will increase funding.
There is little doubt that the Democrats will seize on Mr Schwarzenegger's endorsement for their own political advantage, says our correspondent.
"I am, of course, a supporter of stem cell research," Mr Schwarzenegger said in a statement.
"Research that we do now holds the promise of cures for tomorrow. California has always been a pioneer. We daringly led the way for the high-tech industry and now voters can help ensure we lead the way for the biotech industry."
Californians will vote on whether to back Proposition 71 in a referendum on 2 November, the same day as the presidential election.
If passed, the stem cell proposal would raise $3bn of California state money through bonds, providing scientists with $295m a year over a decade.
Another $3bn would be needed to finance interest payments over 30 years.
Scientists hope the research may offer new medical treatments
It would make the state one of the largest financial backers of the controversial science in the US.
Stem cells are master cells that have the ability to develop into any of the body's tissue types - kidney, heart or even brain tissue.
Scientists hope this tissue could then be used to treat diseases such as Parkinson's, diabetes and Alzheimer's, or perhaps as an alternative to organ transplants.