PHOENIX - Gov. Jan Brewer ignored criticism from President Barack Obama on Friday and signed into law a bill supporters said would take handcuffs off police in dealing with illegal immigration in Arizona, the nation's busiest gateway for human and drug smuggling from Mexico.

With hundreds of protesters outside the state Capitol shouting that the bill would lead to civil rights abuses, Brewer said critics were "overreacting" and that she wouldn't tolerate racial profiling.

"We in Arizona have been more than patient waiting for Washington to act," Brewer said after signing the law. "But decades of inaction and misguided policy have created a dangerous and unacceptable situation."

Earlier Friday, Obama called the Arizona bill "misguided" and instructed the Justice Department to examine it to see if it's legal. He also said the federal government must enact immigration reform at the national level - or leave the door open to "irresponsibility by others."

"That includes, for example, the recent efforts in Arizona, which threaten to undermine basic notions of fairness that we cherish as Americans, as well as the trust between police and their communities that is so crucial to keeping us safe," Obama said.

The legislation, sent to the Republican governor by the GOP-led Legislature, makes it a crime under state law to be in the country illegally. It also requires local police officers to question people about their immigration status if there is reason to suspect they are illegal immigrants; allows lawsuits against government agencies that hinder enforcement of immigration laws; and makes it illegal to hire illegal immigrants for day labor or knowingly transport them.

The law sends "a clear message that Arizona is unfriendly to undocumented aliens," said Peter Spiro, a Temple University law professor and author of the book "Beyond Citizenship: American Identity After Globalization."

Brewer signed the bill in a state auditorium about a mile from the Capitol complex where some 2,000 demonstrators booed when county Supervisor Mary Rose Wilcox announced that "the governor did not listen to our prayers."

"It's going to change our lives," said Emilio Almodovar, a 13-year-old American citizen from Phoenix. "We can't walk to school any more. We can't be in the streets anymore without the pigs thinking we're illegal immigrants."

Protesters gathered in Miami Friday evening at the Freedom Tower, where thousands of Cuban refugees were processed after fleeing the communist revolution.

"A thousand people a day are being deported. A thousand families being destroyed. And this comes at a very high moral and financial cost to this nation," said Maria Rodriguez, executive director of the Florida Immigration Coalition.

The Mexican American Legal Defense and Education Fund said it plans a legal challenge to the law, arguing it "launches Arizona into a spiral of pervasive fear, community distrust, increased crime and costly litigation, with nationwide repercussions."

William Sanchez, president of the National Coalition of Latino Clergy and Christian Leaders Legal Defense Fund, said his group is preparing a federal lawsuit against Arizona to stop the law from being applied. The group represents 30,000 Evangelical churches nationwide, including 300 Latino pastors in Arizona.

"Millions of Latinos around the country are shocked," Sanchez said.

Mexican Foreign Secretary Patricia Espinosa said Friday that the passage of the law will affect relations between Mexico and Arizona and "it will force Mexico to consider whether the cooperation agreements that have been developed with Arizona are viable and useful."

Espinosa said Mexico regrets that Arizona did not take into account the "valuable contributions that migrants make to the economy, society and culture of Arizona and the United States of America."

She said the movement of illegal merchandise along the Mexico-U.S. border is far from being connected to illegal immigration.

Guatemalan Vice President Rafael Estrada said the law "is a step back for those migrants who have fought" for their rights. Guatemala's Foreign Relations Department decried the measure in a statement saying "it threatens basic notions of justice."

The law will take effect in late July or early August, and Brewer ordered the state's law enforcement licensing agency to develop a training course on how to implement it without violating civil rights.

"We must enforce the law evenly, and without regard to skin color, accent, or social status," she said. "We must prove the alarmists and the cynics wrong."

Brewer, who faces a tough election battle and growing anger in the state over illegal immigrants, said the law "protects every Arizona citizen."

Anti-immigrant anger has swelled in the past month, after rancher Rob Krentz was found dead on his land north of Douglas, near the Mexico border. Authorities believe he was fatally shot by an illegal immigrant possibly connected to a drug smuggling cartel.

Arizona has an estimated 460,000 illegal immigrants, and its harsh, remote desert serves as the corridor for the majority of illegal immigrants and drugs moving north into the U.S. from Mexico.

U.S. Rep. Raul Grijalva, a Democrat, said he closed his Arizona offices at noon Friday after his staff in Yuma and Tucson were flooded with calls, some from people threatening violent acts and shouting racial slurs. He called on businesses and groups looking for convention and meeting locations to boycott Arizona.

The bill's Republican sponsor, state Rep. Russell Pearce of Mesa, said Obama and other critics of the bill were "against law enforcement, our citizens and the rule of law."

Pearce said the legislation would remove "political handcuffs" from police and help drive illegal immigrants from the state.

"Illegal is illegal," said Pearce, a driving force on the issue in Arizona. "We'll have less crime. We'll have lower taxes. We'll have safer neighborhoods. We'll have shorter lines in the emergency rooms. We'll have smaller classrooms."

Associated Press writers Julie Pace in Washington, Olga R. Rodriguez in Mexico City, Christine Armario in Miami and Angel Sas in Guatemala City contributed to this report.