The bill by Sen. Leland Yee makes it illegal to dismiss, transfer or discipline teachers for protecting students' free-speech.
The California Newspaper Publishers Association says teachers have been punished at least 12 times since 2001 because of stories or opinion pieces written by student reporters.
The bill by Yee, a San Francisco Democrat, would allow administrators to remove teacher advisers for poor performance.
Yee says the bill, which Schwarzenegger signed Sunday, shows the state's commitment to protecting freedom of the press on campuses. It takes effect Jan. 1.