Trump called the bill “an incredible success for our country” and “beyond bipartisan” during an Oval Office signing ceremony on Friday.
Congresspersons and advocates also hailed it as a hugely influential package and thanked the president for supporting the issue.
The American Civil Liberties Union (ACLU) said the law would give thousands of people in prison a “second chance”.
We applaud the bipartisan group of lawmakers for listening to advocates.
This law will give thousands of currently incarcerated people a second chance and help undo some of the many harms caused by our broken criminal justice system. https://t.co/8qTGXYJPWK
— ACLU (@ACLU) December 21, 2018
The legislation will give judges more discretion when sentencing some drug offenders and will boost prisoner rehabilitation efforts.
It received the rare support of both Democratic and Republican members of Congress, as well as conservative and liberal groups that rarely work together.
Groups that supported the bill included the Fraternal Order of Police, the Centre for American Progress and the Koch brothers, among others.
Playing a key role behind the scenes was Trump’s son-in-law and senior adviser Jared Kushner, whose father spent time in federal prison when he was younger. At the signing ceremony, Trump personally thanked Kushner.
More than 2 million people in prison
The US leads the world in the known prison population, with about 2.2 million people jailed at the end of 2016.
During Senate debate of the bill, Democratic Senator Dick Durbin noted the US had five percent of the world’s population, but 25 percent of the world’s known prison population.
He added that minority groups bore the brunt of tough minimum sentences that judges have been directed to impose as a result of a decades-old law that has exploded the numbers of jailed people.
“The majority of illegal drug users and dealers in America are white. But three-quarters of the people serving time in prison for drug offences are African American or Latino,” Durbin said.
In response to criticism from some conservatives that the legislation could prompt the release of violent criminals into society, the bipartisan measure was reworked to scale back the discretion judges would have in some sentencing cases.
The passage of the bill is seen as a major victory for advocates who have worked for years on similar pieces of reform legislation but were continually blocked by conservatives amid scepticism within the Republican leadership.