Brown signed the legislation in front of Los Angeles City Hall around 9:45 a.m.
"The rest of this country will have to stand up and take notice - no longer are undocumented people in the shadows," said Brown. "They are alive, well and respected."
California now joins the District of Columbia and nine other states that have passed such a law.
An estimated 1.4 million people will eventually head to DMV offices now that Assembly Bill 60 has been approved. The licenses are expected to be issued starting Jan. 1, 2015.
In California, the license will carry a special distinction on the front of the card that states that the document may be used for driving, not as a federal identification. The marker has caused concern for immigrant advocates who feel the DP mark could lead to profiling.
At the same time, undocumented immigrants will not be driving in fear anymore of having their cars impounded or being deported if pulled over. The bill includes protections for discrimination.
Supporters of the bill said it would improve safety on the roads by ensuring that all drivers have taken a driver's test and purchased auto insurance.
Opponents of the bill, mostly born Americans and new Americans who worked years to get their citizenship, believe getting a driver's license is a privilege that should be available to people who are in the country legally.
Brown was accompanied outside City Hall by state Sen. Kevin de Leon. Los Angeles City Councilman Gil Cedillo, a former Democratic state lawmaker and longtime champion of lifting restrictions on immigrant driver's licenses, also attended the ceremony, as well as Mayor Eric Garcetti and Los Angeles police Chief Charile Beck.
"That's what this bill is about, making the streets of this state safer," said Beck.
The license cannot be used to fly, for voter registration or to receive public benefits. It remains unclear if libraries or banks will accept the I.D.
CNS contributed to this report.