The law allows physicians to assist with people taking their own lives under very specific circumstances.
The bill narrowly passed in both the House of Representatives and Senate, with supporters arguing the bill gives the terminally ill an alternative to suffering.
Opponents had called on the governor to veto the bill they said puts the terminally ill in "grave danger."
During the signing, Mills expressed her support for the measure.
"It is my hope that this law, while respecting the right of personal liberty, will be used sparingly, that we will respect the life of every citizen with the utmost concern for their spiritual and physical well being. ... And as a society, we will be as vigorous in providing full comfort and hospice care to all persons no matter their status, location or financial ability as we are in respecting their right to make this ultimate decision over their own fate, of their own free will," she said.
Mills also signed an executive order directing the Maine Department of Health and Human Services to "carefully monitor" implementation of the new law.
Maine now becomes the eighth state to legalize so-called 'death with dignity."