Uganda's leader has signed into law a bill toughening penalties for gay people but without a clause criminalising those who do not report them.A proposed sentence of up to 14 years for first-time offenders has also been removed.
US President Barack Obama had cautioned the bill would be a backward step.
Mr Museveni had previously agreed to put the bill on hold pending US scientific advice.
Homosexual acts are already illegal in Uganda.
The new law allows life imprisonment as the penalty for acts of "aggravated homosexuality" and also criminalises the "promotion" of homosexuality".
The bill passed by parliament in December made it a crime not to report gay people - in effect making it impossible to live as openly gay - but this clause has been removed from the legislation signed by the president.
Homosexuality is just bad behaviour, that should not be allowed in our society”
MP David Bahati
Lesbians are covered by the bill for the first time.Gay activists say they will challenge the new laws in court.
The bill originally proposed the death penalty for some homosexual acts, but that was later removed amid international criticism.
'Very scared'Government officials clapped after Mr Museveni signed the bill at a news conference at State House.
The BBC's Catherine Byaruhanga, in Uganda, says it is rare for the president to assent to bills so publicly.
But the anti-gay bill has become so controversial that the media were invited to witness its signing, she says.
Earlier, government spokesman spokesman Ofwono Opondo told the Reuters news agency Mr Museveni wanted "to demonstrate Uganda's independence in the face of Western pressure and provocation".
The sponsor of the bill, MP David Bahati, insisted homosexuality was a "behaviour that can be learned and can be unlearned".
"Homosexuality is just bad behaviour that should not be allowed in our society," he told the BBC's Newsday programme.
But a gay rights activist in Uganda told the programme that he was "very scared" about the new bill.
"I didn't even go to work today [Monday]. I'm locked up in the house. And I don't know what's going to happen now."
Our correspondent says although Mr Museveni had been apprehensive about signing the bill, he could not convince his party, religious groups and many of his citizens that it was not needed.
His signature is an apparent U-turn from a recent pledge to hold off, pending advice from the US.
In a statement, Mr Museveni had said: "I... encourage the US government to help us by working with our scientists to study whether, indeed, there are people who are born homosexual.
"When that is proved, we can review this legislation."
President Obama described it as "more than an affront, and a danger to, Uganda's gay community. It will be a step backwards for all Ugandans."
He warned it could "complicate" Washington's relations with Uganda, which receives a reported $400m (£240m) in annual aid from the US.