Schools will be required to report confirmed cases of bullying to the Education Ministry and local government officials, and work with education boards to set up investigative panels to look into complaints and advise victims, Kyodo News reported.
The law defines bullying in public schools that results in serious physical or mental injury as a "serious situation."
The action came after several cases of bullying, including one in October 2011 in which a junior high school student in Otsu killed himself after being the subject of extreme bullying.
The law requires state and local governments to monitor the Internet for online bullying and cooperate with police if such web-based activity is determined to be criminal, Kyodo said.
The bill was jointly sponsored by six members of parliament from ruling and opposition parties and approved by the House of Councilors, the upper chamber of Japan's parliament.