The proposal to decriminalize possession of 15 grams or less of marijuana would need approval from the City Council, the Chicago Sun-Times reported.
Last fall, Chicago Alderman Danny Solis had proposed a $200 fine for possession of small amounts of marijuana.
"When the ordinance was first introduced, I asked the Chicago Police Department to do a thorough analysis to determine if this reform balanced public safety and common-sense rules that save taxpayer dollars to reinvest in putting more officers on the street," Emanuel said in a statement.
"The result is an ordinance that allows us to observe the law, while reducing the processing time for minor possession of marijuana -- ultimately freeing up police officers for the street."
Under current law, those caught with small quantities of marijuana face misdemeanor carrying up to six months in jail and a $1,500 fine.
The mayor's office said police department statistics indicate 18,298 people were arrested last year on charges of possession of less than 10 grams of marijuana, the Chicago Tribune reported.
Chicago Police Superintendent Garry McCarthy said the proposal would free more than 20,000 hours in police time and result in $1 million in savings.
"I am pleased that Mayor Emanuel has taken this step to address this important issue," Solis said in a statement. "One of the most significant results of this ordinance is that it will allow our police officers to spend more time out policing our neighborhoods and less time processing minor offenses and filling out paperwork. Passing this ordinance will be a major victory in promoting safe neighborhoods and reducing crime."
Solis had distributed arrest figures for the past decade showing a disproportionate number of minorities were arrested for marijuana possession.