Governor Jerry Brown issued an executive order to bring down emissions to 40% below 1990 levels, in the next 15 years.
The US state was already one of the most ambitious in its previous targets and has forced companies to pay for their carbon pollution.
Mr Brown said the new target must be met for the sake of future generations.
He called the plan "the most aggressive benchmark enacted by any government in North America to reduce dangerous carbon emissions".
There were few details about how he intends to meet this target, but the governor has previously talked about increasing renewable electricity sources, reducing petrol use in vehicles and improving the energy efficiency of existing buildings.
Mr Brown mentioned by name some sectors that will have to reduce emissions - industry, agriculture and energy, plus state and local governments.
"With this order, California sets a very high bar for itself and other states and nations, but it's one that must be reached - for this generation and generations to come,'' he said in a statement.
California is the second-biggest producer of carbon dioxide through fossil fuels among US states.
The Sequoia National Park is usually snow-covered in April
Environmentalists say Mr Brown has not gone far enough
The new target brings California in line with a similar commitment made by the 28 countries of the European Union, but beyond what the US federal government has set.
The state is already well on its way to meeting the 2020 goal set by Mr Brown's predecessor, Arnold Schwarzenegger.
California has been enduring one of the worst droughts in its history, and the governor made clear as he issued the new order that he links this problem to greenhouse gas emissions and the warming of the Earth.
Climate change, he said, "poses an ever-growing threat to the well-being, public health, natural resources, economy, and the environment of California".
The loss of snowpack, drought, rising sea levels, wildfires, heat waves and smog were examples of how the state was feeling its effects, he added.
Three years ago, California launched one of the largest "cap-and-trade" programmes in the US, which sets a limit on carbon emissions and penalises businesses that exceed their emission allowance.
Mr Brown's announcement was praised by organisers of the UN conference on climate change to be held in Paris later this year.
According to the US Environmental Protection Agency, the state - which has 12% of the US population - produces 6.9% of the country's total emissions.
However, Texas - which has only 8.5% of the US population - produces 12.8% of the country's emissions.
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