Christie said on "issues of medical treatment for children we must look to experts in the field to determine the relative risks and rewards," citing a litany of potential ill effects of trying to change sexual orientation, including depression, drug abuse and suicide.
"I believe that exposing children to these health risks without clear evidence of benefits that outweigh these serious risks is not appropriate," he said.
Christie, however, has not moderated his position on gay marriage, which he vetoed and continues to oppose. As a result, gay rights activists applauded Monday's bill signing but pushed for more.
"It is our truest hope that the governor will realize, as the majority of the legislature and a super-majority of the public have realized, that the best way to ensure lesbian, gay, bisexual, transgender youth are protected from the abuse of being ostracized is to provide them with equality," Troy Stevenson, executive director of the state's largest gay rights group, Garden State Equality, said in a statement.
Christie has said he supports the state's civil union law, which was enacted to give gay couples the benefits of marriage but not the title. Several couples have since sued, claiming the law provides them unequal treatment. A court decision is expected next month.
Gay rights groups say conversion therapy damages young people, because it tells them that it's not acceptable to be whoever they are.
Some social conservatives framed the debate as a parental rights issue, saying a ban on the counseling would limit the ability of parents to do what they think is best for their children.
Conversion therapy has increasingly drawn criticism for its methods. Last year, four gay men sued a Jersey City group for fraud, saying its program included making them strip naked and attack effigies of their mothers with baseball bats.
California has also banned it.
Ken Thomas contributed to this report from Washington.