Lethal injection drugs have been harder to come by in recent years, as manufacturers grow increasingly resistant to selling products used to execute people.
Tennessee inmates convicted more than 16 years ago have already been able to choose between lethal injection or the electric chair as their preferred method for execution.
Eight states, including Tennessee, currently allow electrocution as an option for death-row inmates. Tennessee's new law, however, would make electric chair the only option in the absence of lethal injection drugs.
In a recent poll, 56 percent of Tennessee residents said they backed use of the electric chair if "drugs used for lethal injection are not available."
The law is likely to face legal challenges.
"I had hoped that Governor Haslam would see that this bill is taking us a step backward and veto it," Kelley Henry, of Tennessee Federal Public Defender's Office, told NBC News. "It puts Tennessee as an outlier to the rest of the nation."
Virginia inmate Robert Charles Gleason Jr. was the last person to be executed by electric chair in 2013, after he was convicted of strangling two fellow prisoners.
Haslam's signature comes two days after Supreme Court Justice Samuel Alito's issued a last-minute order to postpone the execution of inmate Russell Bucklew, whose legal team raised concerns about a medical condition that could have complicated his death by legal injection.