The ruling party has been critical of the media
The new law requires all journalists to register with a special media commission.
The commission has wide ranging powers including closing down media houses or imprisoning journalists for contempt.
But the Gambia Press Union says it will not leave the matter unchallenged.
The BBC's Banjul correspondent, Ebrima Sillah, reports that MPs from the ruling APRC party supporting the bill said it spelled the end of sensational journalism.
Opposition MPs condemned the law as draconian and said it was designed to muzzle a vibrant, independent press.
Under the law, a new National Media Commission is to rule on complaints against journalists. It will be able to summon journalists to reply to accusations and order them to reveal their sources.
Code of conduct
The commission will draw up a code of conduct for the media, as well as accredit journalists and press organizations.
The press has been accused of negative reporting by the government.
Journalists say they will not cooperate in implementing the law.
Under the law, no media outlet will be allowed to operate without an annually renewable licence, which the commission can suspend or cancel.
It can also close down media and impose big fines.
In January, President Yahya Jammeh sealed his hold on power with a landslide victory in parliamentary polls boycotted by much of the opposition.
President Jammeh first seized power in a military coup in 1994, and has made it clear he favours one-party rule.