The so-called Supreme Council for the Press and Media will see its chairman and members selected by President Abdel-Fattah al-Sisi, who himself signed the bill into law after it was approved by parliament.
The body will have the power to sue outlets it feels violate regulations as well as to give and revoke licences to foreign media outlets, according to the Official Gazette.
It will be tasked with creating a list of penalties against outlets who break licence terms and ensuring fair competition between media groups, neutrality, independence and adherence to journalistic ethics.
On Sunday, the interior ministry said it arrested an Al-Jazeera journalist over “incitement” and “fabricating” news.
Egypt provoked international condemnation in 2013 when it arrested three Al-Jazeera journalists, including a Canadian and an Australian, and sentenced them to jail on similar accusations.
After spending more than a year in prison, the three journalists were released and left the country.