The bill by Assemblywoman Fiona Ma will ban products from being made, sold or distributed in California if they contain more than one tenth of one percent of phthalates.
Phthalates is a common chemical that is used to soften and smooth plastics in baby bottles, soft baby books, teething rings and other toys.
Scientists fear the chemical interferes with hormones and leads to early puberty, reproduction defects and other health problems. Opponents say scientific research is lacking.
Schwarzenegger has until midnight to sign 151 bills still pending.