Echoing a similar law in New York -- which ushered in a blanket ban on the sale of all foods containing trans fats earlier this month -- California authorities said the move would help combat heart disease.
"Consuming trans fat is linked to coronary heart disease, and today we are taking a strong step toward creating a healthier future for California," Schwarzenegger said in a statement.
Under the California law, restaurants must cease using trans fats by 2010 before the ban is widened to all baked goods by 2011.
Trans fat, which is made when manufacturers add hydrogen to vegetable oil, increases "bad" cholesterol levels, raising the risk of coronary heart disease, according to the Food and Drug Administration (FDA).
According to the New England Journal of Medicine, eliminating artificial trans fats from the food supply could prevent between six and 19 percent of heart attacks and related deaths each year.