"Communities of color have been disproportionately impacted by laws governing marijuana for far too long, and today we are ending this injustice once and for all," Cuomo said in a statement.
"By providing individuals who have suffered the consequences of an unfair marijuana conviction with a path to have their records expunged and by reducing draconian penalties, we are taking a critical step forward in addressing a broken and discriminatory criminal justice process."
The new bill, approved by New York’s state legislature earlier this year, will reduce unlawful marijuana possession to a misdemeanor punishable by a fine.
Possession under two ounces will not be met with criminal penalties.
It also establishes a process for individuals with certain marijuana convictions to have their records cleared both retroactively and for future convictions, a major sticking point for criminal justice reform advocates.
The bill will take effect 30 days after becoming law.
Cuomo previously proposed decriminalizing marijuana in 2013.
The bill signing Monday follows a recent wave of legislation legalizing or decriminalizing marijuana at the state level.
Hawaii became the 26th state to legalize or decriminalize the drug earlier this month.
Sen. Kamala Harris (D-Calif.) and House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) earlier this month introduced a bill that would decriminalize marijuana and expunge previous convictions nationally.
The plan to legalize the drug in New York faced a hurdle earlier this year when Cuomo announced he was dropping the plan from the state's upcoming budget, arguing state lawmakers needed more time to reach an agreement.