The legislation, signed by New York state governor Andrew Cuomo late Monday, will now give models under the age of 18 the same protection as child performers.
It is likely to have a significant impact on recruiting for catwalk shows and magazine shoots in New York, one of the most iconic fashion capitals of the world.
The amendments to existing legislation, brought by New York state senators Diane Savino and Jeff Klein, will come into effect in 30 days time.
The bill warned that child models are frequently exposed to sexual harassment and lacked adequate education and financial protections under existing law.
The Council of Fashion Designers of America on Tuesday said the changes would greatly impact the casting of models for New York Fashion Week in February.
The legislation limits young models' working hours and stipulates they should leave before midnight on a school night or at 12:30 am on weekends.
Designers have to ensure 15 percent of the model's fee is put into a trust account until he or she is 18.
If they miss three or more consecutive days of school, they must also be provided a tutor.
Models under 16 years old must be provided a chaperone and a nurse with pediatric experience should be on hand.
The bill's sponsors Savion and Klein, and state assemblyman Steven Otis welcomed the new law governing an industry that can hire models as young as 13.
"We have brought an end to the rampant exploitation and sexual abuse of child models by giving child models the critical protections they have been denied for too long," Savino told a news conference.