The parliament dominated by lawmakers from President Abdulla Yameen's Progressive Party of Maldives voted 47 to 31 in favour of the controversial bill that criminalises defamation.
The main opposition as well as rights activists say the law allows the government to impose severe penalties on those seeking to exercise freedom of speech, including shutting down news organisations and jailing journalists for up to six months.
A coalition of opposition parties said the passage of the controversial law was a retrograde step in a country which abolished criminal defamation in 2009, a year after its first democratic elections.
It accused Yameen of enacting the legislation to silence critics who accuse him of corruption.
The Indian Ocean archipelago, whose beaches are a popular attraction for wealthy Western tourists, adopted multi-party democracy in 2008 after three decades of autocratic rule by Yameen's half brother, Maumoon Abdul Gayoom.
But it has been gripped by turmoil since its first democratically-elected leader Mohamed Nasheed was toppled in 2012 in what he claims what was a coup.
Opposition parties, some of which had opposed Nasheed earlier, have united in their campaign against Yameen.
Journalists staged a protest outside parliament as the law was passed.
"This is truly the end of free media in the Maldives. The government no longer needs an excuse to shut down media outlets or crack down on dissenters," Ali Naafiz, assistant editor of the private Mihaaru news website, told AFP.
The Maldives went ahead with the vote nine days after the United States and European countries urged Yameen to withdraw the bill and "return to the path of democracy".
UN rights official Mona Rishmawi, speaking in Geneva, described the law as "very, very, very wide". It could target journalists and human rights defenders and risks "crippling freedom of expression", Rishmawi said.
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