Yoweri Museveni on Monday signed the bill, which holds that homosexuals be jailed for long terms, outlaws the promotion of homosexuality and requires people to denounce gays.
He denounced gays and spoke in lurid detail about sexual activity while signing one of the world's toughest anti-gay laws, which has come under fierce criticism from the US president, Barack Obama, who has warned that ties between Kampala and Washington would be damaged.
"Homosexuals are actually mercenaries. They are heterosexual people but because of money they say they are homosexuals. These are prostitutes because of money," Musaveni said.
He added "there is something really wrong with you" if you were gay, adding that he didn't understand how a man could "fail to be attracted to all these beautiful women and be attracted to a man".
Speaking with newsmen, Uganda's minister for ethics and integrity, Simon Lokodo, said that homosexuality was "contrary to the order of nature and therefore it is illegal".
He said he could teach gay people to be straight, and had done so.
The US secretary of state, John Kerry, said his country was reviewing its relationship with Uganda now that the bill has been enacted.
Earlier in the day, Ugandan government spokesman Ofwono Opondo said, the president "wants to sign it with the full witness of the international media to demonstrate Uganda's independence in the face of Western pressure and provocation."
The bill is popular in Uganda, but rights groups have condemned it as draconian in a country where homosexuality is already illegal.
"Outsiders cannot dictate to us, this is our country," said Museveni. "I advise friends from the West not to make this an issue, because if they make it an issue the more they will lose."
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