The decision comes just four days after the U.S. Supreme Court ruled Chicago's handgun ban was unconstitutional.
The new city ordinance bans gun shops in Chicago and prohibits gun owners from stepping outside their homes with a firearm.
The mayor's plan to have a new ordinance in place before the end of week happened. All 45 City Council members present voted for the new handgun possession rules.
"You can buy one pistol a month. What is wrong with that. If you can't protect your home with that armament, you shouldn't be here," said Ald. James Balcer, 11th Ward.
"I pray that our families will go out and get the proper protections and the proper training so that we don't have to see senseless deaths in our homes," said Deborah Graham, 29th Ward.
Chicago's new handgun ordinance, which will become effective on June 12, requires training in the classroom and firing range before residents may apply for a city firearm permit that will cost $125 to obtain. Only one gun a month per adult may be registered and owners must have no violent crime or DUI convictions in their history.
"We'll do what we did before, we'll take 'em to court," said Todd Vandermyde, Illinois Rifle Association.
While the Illinois Rifle Association joined the legal battle to overturn the city's all out firearms ban at the Supreme Court this week, Vandermyde said the city is trying to ration what the justices said is a constitutional right.
"The city and the mayor want to keep some form of a gun ban and put as many bureaucratic and red tape hurdles in front of people who want to exercise that right," said Vandermyde.
"We have responded to the law, we think, in a common sense and very reasonable way," said Mayor Richard Daley.
The city offers a 90-day grace period for gun owners to register what weapons they already have. After then, a homeowner could be punished for having an unregistered handgun.
"It's a $1,000 to $500 fine and potentially 20 to 90 days in jail," said Mara Georges, Chicago Corporation Counsel.
"There are a lot of regulations here. I figure a lawsuit is going to be filed next week," said Prof. Ann Lousin, John Marshall Law School.
David and Colleen Lawson, who were plaintiffs in the Supreme Court case, disagree with the new ordinance's ban on gun shops and firing ranges inside the city limits.
"You can't just buy a firearm and be safe. You have to know how to use that firearm," said David Lawson.
Applicants for a Chicago firearm permit must already have a state firearm owner identification card and they also will be fingerprinted.
All the rules set forth by the new gun ordinance will be reviewed by the federal 7th Circuit Court of Appeals. The judges will decide whether or not the regulations violate the Second Amendment right to bear arms.