The measure, approved by China's Communist Party-controlled parliament on Saturday, "strengthens regulation of the use of wild animals and products derived from them," the official Xinhua news agency said.
Environmental campaigners previously slammed a draft of the law for treating animals, including tigers and bears, as commercial resources and saying it would not halt their slaughter.
The draft would "further entrench policies of captive-breeding for commercial use of parts and derivatives of captive tigers", the Environmental Investigation Agency said.
The new law bans the production and sale of all food products made from endangered animals, according to a version posted on the website of the National People's Congress, China's rubber stamp legislature.
But it allows for "breeding and public performances" by endangered animals as well as "the sale, purchase and use" of products made from such animals, as long as permission was granted by "authoritative departments".
It was not clear whether or how it differentiated between products and food.
It was not immediately clear how such approvals would be managed.
Breeding of sika deer, a nationally-listed endangered animal, could be allowed as "millions have been bred under controlled conditions nationwide", Xinhua quoted forestry official Zhou Xun as saying.
Captive tiger numbers are soaring in China, with up to 6,000 -- twice the global wild population -- in about 200 farms across the country, according to estimates.
