Trump's action, a rebuke of Democratic climate change policies, comes after the Republican-led Congress revoked the state's waiver allowing it to set more stringent regulations for cars.
California had planned to end the sale of gasoline-only vehicles by 2035, among other ambitious efforts.
During the signing ceremony at the White House, Trump lashed out at the state's bid as "a disaster for this country" and said the resolutions he was signing would save the industry from "destruction."
California swiftly sued the Trump administration over the resolutions, with Attorney General Rob Bonta saying: "The President's divisive, partisan agenda is jeopardizing our lives, our economy and our environment."
"It's reckless, it's illegal, and because of it, we'll be seeing the Trump administration in court again for the 26th time," he added.
California, the nation's wealthiest state with around 40 million people, has long used the waiver in the Clean Air Act to set its own emissions standards as it tries to mitigate some of the worst air pollution in the country.
The size of the auto market in the state -- and the fact that several other states follow its lead -- means automakers frequently use its standards nationwide.
Trump's move also came as he clashes with California over immigration enforcement.
California Governor Gavin Newsom has accused the president of acting like a tyrant over his use of the military to control small-scale protests in Los Angeles.
- Environmental concerns -
Trump's action was condemned by environmental groups who say the rules are key for easing pollution.
And Newsom recently argued that rolling back the state's EV ambitions would boost China's position on the market.
While China is a manufacturing hub for such vehicles globally, the United States is a net importer of them, he said in a May statement.
This is despite the United States being home to technologies that have pioneered the clean car industry, he noted.
Trump has repeatedly criticized subsidies to encourage the EV industry despite significant federal funding allocated to projects in Republican districts -- where thousands of jobs are expected to be created.
He took aim at the sector as part of his flurry of executive orders on his first day in office this January in a bid to ensure what he called a "level" playing field for gasoline-powered motors.
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