The law, which took effect Sunday, makes Massachusetts the 16th state with protection for transgender residents' rights, The Boston Globe reported. Proponents first submitted the legislation five years ago and it was passe seven months ago.
Under the the Massachusetts Transgender Equal Rights Act, prosecutors can also bring hate crime charges in attacks targeting someone for being transgender.
Proponents said the law would allow transgender residents to live more openly.
"This a tremendously historic and life-changing day for transgender people across the state, and really for anybody that values fairness," said Kara Suffredini, executive director of MassEquality, which lobbied for the law.
Opponents criticized lawmakers for stopping debate before those against the measure could introduce additional amendments.
"What this bill does, it not only reinforces it [transgenderism], but it uses the force of law to force society to integrate it into society as if it were normal," said Brian Camenker, director of MassResistance, which opposes the law.
Camenker calls transgender identity a disorder.
The Globe said about 33,000 Massachusetts residents identify as transgender.