It also shields those applying it, such as the military and police, from legal ramifications for the proportionate use of force "in performing their duties."
Sisi had promised a tougher legal system in July, after a car bomb attack that killed the top public prosecutor, the highest level state official to be killed in years.
Forming or leading a group deemed a "terrorist entity" by the government will be punishable by death or life in prison. Membership in such a group will carry up to 10 years in jail.
Financing "terrorist groups" will also carry a penalty of life in prison, which in Egypt is 25 years. Inciting violence, which includes "promoting ideas that call for violence" will lead to between five and seven years in jail, as will creating or using websites that spread such ideas.
Journalists will be fined for contradicting the authorities` version of any terrorist attack. The original draft of the law was amended following domestic and international outcry after it initially called for imprisonment for such an offence.
Egypt is facing an increasingly violent insurgency in North Sinai, where the most active militant group has pledged allegiance to Islamic State. Cairo and other cities have also witnessed attacks.
The insurgency, which has killed hundreds of soldiers and police, has intensified since then-army chief Sisi ousted the Islamist former President Mohamed Mursi after mass protests against his rule in 2013.
Sisi has since overseen a crackdown on Islamists. Thousands of alleged Islamist supporters have been jailed and scores have been sentenced to death, including Mursi and other senior Muslim Brotherhood figures.
The government considers the Brotherhood a terrorist group and does not distinguish between it and other militants. The Brotherhood says it is committed to peaceful activism.
In February, Sisi signed off on another anti-terrorism law that gave authorities sweeping powers to ban groups on charges ranging from harming national unity to disrupting public order.
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