The Republican said he hopes it isn't necessary to exercise the newfound authority but thinks it's important to ensure students in the school system are protected. The district is facing the possible loss of accreditation from the Southern Association of Colleges and Schools because of board infighting and a high-profile test cheating scandal.
The U.S. Department of Justice must still sign off on the law under the Voting Rights Act, which applies to changes in Georgia elections law.
"It is my utmost hope that the board will regain accreditation, that it will be not necessary for interference with duly-elected members of a school board," Deal said in a speech before the Atlanta Press Club.
"But in the event things do not improve there needs to be some option to deal with that."
The measure has the support of Atlanta Mayor Kasim Reed, who praised Deal for signing the bill, saying it provides a safety net if the board founders.
"A loss of accreditation for the Atlanta Public School system would be catastrophic for the 49,000 students whom the district serves, and would cripple economic development and business investment in the city, region and state for years to come," the Democratic mayor said in a statement.
But school board chairman Khaatim Sherrer El said the board has made "substantial progress" in addressing accreditation issues well ahead of the SACS deadline.
"The governor has a representative who has attended every board meeting since the beginning of the year who is well aware of the specific progress the Board has made," El said.
State Sen. Vincent Fort, an Atlanta Democrat, said he was disappointed Deal had signed the law, which he said "would nullify the voting rights of tens of thousands of Atlantans."
The bill Deal signed into law on Wednesday also shrinks the DeKalb County school board from nine members to seven and provides that school board terms must be at least four years in length.
It is the second straight year that the state Legislature has taken aim at local school boards.
In the wake of Clayton County schools losing their accreditation, lawmakers approved a law last year which gave the governor power to remove school board members. But it applied to school boards elected after July 2010. All of Atlanta's school board members were elected in 2009.
The new law applies retroactively and gives Deal the ability to remove school board members by July 1 if they aren't making progress.
The district is facing a Sept. 30 deadline to show SACS that it has improved its management. El said the board has a self-imposed deadline of April 29.
Deal also said Wednesday that he is open to dealing with tax reform during a special session in August set to tackle redistricting, in which congressional and legislative district lines are redrawn to conform with new U.S. Census data.
"It is very likely that if we can reach some agreement with a package that will not keep us in for a long session that we may include that in the call as well," Deal said.