The government has set aside at least 10bn pesos ($224m: Â£148m) to compensate thousands of people who suffered rights abuses in the Marcos era.
The money was recovered from Swiss bank accounts secretly maintained by Marcos during his 20 years in power.
President Benigno Aquino said the move would "right the wrongs of the past".
"We may not bring back the time stolen from martial law victims, but we can assure them of the state's recognition of their sufferings that will help bring them closer to the healing of their wounds," he said at a ceremony in Manila.
Marcos introduced martial law, under which thousands of people were detained, tortured or "disappeared" by the security forces.
The law marks 27 years since Marcos was ousted in the country's "People Power" revolution, which was headed by Mr Aquino's mother, Corazon Aquino.
It calls for the establishment of a human rights board, which will assess each claim and award compensation accordingly.
The bill's sponsor, Senator Francis Escudero, said it would also offer non-monetary compensation where needed, including social and psychological assistance, the Philippines Star reports.
Loretta Ann Rosales, head of the Philippines rights commission who was herself tortured under Marcos, said the law was "essential in rectifying the abuses" of the era and would allow victims a sense of justice, AFP reports.
However another rights campaigner, Marie Hilao-Enriquez, told AFP there were "so many victims that when you divide it to everyone it will not result to much".
Marcos died in exile in Hawaii in 1989.
The Philippine president has signed a law to give compensation to victims of the country's former leader, Ferdinand Marcos.