The law – RPPL 11-27 – has expanded the Tobacco Control Act to include e-cigarettes and will come into effect 60 days after being enacted.
It means that from May 29, businesses and individuals can be prosecuted if found with e-cigarette products.
Authorities are hoping that the new law will "protect the public's health", in particular the young people of the island nation.
Individuals who are caught violating the law could face a $US1000 fine and businesses or persons importing, distributing, and/or selling the product could face a $US20,000 fine.
The initial bill was introduced in the Palau National Congress in July last year.
Palau's First Lady Valerie Whipps, who chairs the Tobacco Coalition, said that e-cigarette products contained chemicals that affected the brain development of young people and the highly addictive nicotine.
"This product is specifically designed to attract young people, and if we let it, we will be raising an entire generation that is damaged by this harmful product," the First Lady stated.
"I think it is a good law," a student from Emmaus who attended the signing ceremony, told the Island Times.
He said he had not used the product but knows people who did.
The signing of the law was witnessed by students from high schools, members of sports programs, members of Mechesil Belau, church groups, representatives of the Ministry of Health, and members of various NGOs, the Island Times reported.
According to statistics from Palau's health and human services ministry, a significant increase has been noted in e-cigarette use among students since 2019, with as much as seven percent of students having used e-cigarettes, with users as young as 13-years-old.
"This bill will protect the health of the public, especially our youth, from the detrimental effects of electronic cigarettes," President Whipps Jr said, adding that the law "will further our goal of promoting a healthy lifestyle among our citizens."
He has called for a whole-of-government, whole-of-society approach for the enforcement of the new law.
He said that enforcement efforts needed "begin at the border with the ceasing of imports and for community members to assist with reporting of distribution and consumption infractions to the proper authorities."
But some critics of the law say that the if the government aim is to protect the health of the people then it should not stop at just banning e-cigarettes.
"If ban(ning) vape and e-cigs (sic), why not ban tobacco as well? If the point of the ban is for the health and well being of society. I believe cigarettes have more chemicals and do more harm," Facebook user Huana Dilkui Marino said.