"We have people who have gone so far off the deep end that they have forgotten what it is like to be an American," said City Council President Eric Garcetti, whose grandparents were born in Mexico.
Councilman Greig Smith was the lone vote against the boycott. A spokesperson said Smith believes that it is a symbolic vote that could have longer unintended impacts to Los Angeles.
Mayor Antonio Villaraigosa already has said he'll sign the resolution.
The city does about $56 million worth of business with Arizona, and officials said about $8 million worth of those contracts could be terminated.
There are four contracts with Arizona based companies by the Harbor Department totaling $25.6 million. The LAPD spends more than $1.2 million on Tasers from Arizona.
Officials admit the boycott may end up costing the city more, but it also may bring more business back to L.A.
"Maybe what this will do is allow us to contract with businesses that are in the city of Los Angeles," said Councilwoman Janice Hahn. "We've basically have been contracting out to Arizona, maybe this is an opportunity to have that same money go toward businesses locally."
On May 1, there were massive rallies across the nation, with the biggest in Los Angeles. About 60,000 people turned out in downtown L.A., with many protesters saying the new law would lead to racial profiling and police targeting Latinos and Hispanics.
"As an American I cannot go to Arizona without a passport if I come across an officer who is having a bad day," said Councilman Ed Reyes.
Government agencies across the country are trying to take action against Arizona to try to punish the state for its immigration stance.
The Associated Press contributed to this story.