Maryland is the latest state to prohibit official business with companies boycotting Israel.
Republican Governor Larry Hogan signed an executive order Monday after the Democratic-led state legislature filed to pass a bill spelling out the policy.
"Boycotts based on religion, national origin, place of residence or ethnicity are discriminatory," Hogan said. "Contracting with businesses that practice discrimination would make the state a passive participant in private-sector commercial discrimination."
The governor said the state will review all existing contracts for any boycotts of Israel.
The head of the U.S. Campaign for Palestinian Rights, Yousef Munayyer, called Hogan's executive order "profoundly disappointing" and unconstitutional.
The American Civil Liberties Union has filed a lawsuit against an anti-boycott law in Kansas.
Other states that have passed anti-Israeli boycott laws include Illinois, New York and South Carolina.