The ban, slated to come into effect from Friday midnight, was aimed to putting a stop to nearly four months of anti-government protests in the city that started against the now-shelved extradition bill, the South China Morning Post reported.
Confirming the imposition of the ban, Lam told the media: "We can't allow the escalation of violence and have been exploring possible laws to curb violence. This morning, I convened the special meeting of Exco and decided to enact the Prohibition on Face Covering Regulation.
"It will come into force by midnight on Friday."
Lam said that nearly all protesters at illegal assemblies wear masks to evade legal consequences. "We hope the law can create a deterrent effect," she said.
"The decision is not an easy one, but necessary. I want to stress that the law doesn't mean Hong Kong is in a state of emergency."
Lam noted that this was a subsidiary legislation, and there would be negative vetting at the legislature. That will be tabled at the Legislative Council on October 16 for lawmakers to amend it after implementation.
Secretary for Security John Lee said that the anti-mask law aimed to deter people from taking part in violence, and will help law enforcement agencies gather information.
The Secretary added that violators of the law could be sentenced to one year in prison, or fined HK$25,000 ($3,188).
Meanwhile, anti-government protesters and workers in Central have responded to Lam's announcement of the anti-mask law by chanting "Hongkongers, resist", reports the South China Morning Post.
Hundreds were rallying at the intersection of Des Voeux Road Central and Pedder Street, paralysing traffic in the main thoroughfare in the business heart of the city.
Hong Kong has emerged from 17 straight weekends of protest, triggered by the now-withdrawn extradition bill, which would have allowed criminal suspects to be sent back to mainland China.
( With inputs from IANS )