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In a decree issued by outgoing interim president Adly Mansour, sexual harassment is now a crime punishable by up to five years in jail.
Until now, Egypt has not had a law defining sexual harassment.
A 2013 UN study said that nine out of 10 Egyptian women had experienced some form of sexual assault, ranging from minor harassment to rape.
Human rights campaigners have describe the extent of the problem in Egypt as "horrifying".
Incidents have soared in the three years since the 2011 overthrow of Hosni Mubarak.
Under the new laws, harassers face from six months to five years in prison. The longer sentences are reserved for offenders who hold a position of power over their victims such as being a woman's superior at work or being armed with a weapon, BBC reported.
Presidential spokesman Ehab Badawi said the decree defines a sexual harasser as a person seeking to achieve "an interest of a sexual nature".
Repeat offenders would see their sentences doubled, he said.
As well as jail terms, offenders face fines of up to 5,000 Egyptian pounds ($714; £415).
However, Fathi Farid, a founder of the "I Saw Harassment" campaign that documents assaults on women, said the new laws were "of no value" as they gave judges the right to choose between a fine or jail.
He also said the punishments were not enough for cases involving sexual assaults by mobs.