Malvo, who is serving multiple life sentences for his part in a murderous seven-week rampage that terrorized the nation's capital region, had sought resentencing to take into account his age at the time of the crimes. He was 17 in 2002 when he helped John Allen Muhammad kill 10 and wound three others.
Virginia Gov. Ralph Northam, a Democrat, signed the measure on Monday, allowing any person sentenced to life as a juvenile and who has served at least 20 years to be considered for early release by a state parole board.
"The new law means that Mr. Malvo -- and other juvenile offenders serving life in Virginia -- will be eligible to be considered for parole after serving 20 years," said Malvo attorney Danielle Spinelli in an email to ABC News.
In a letter to the Court signed by Malvo's attorney and an attorney for the state of Virginia, both sides agreed the case is now moot and should be dismissed. Malvo will retain his sentences and remain behind bars, the letter says.
The Supreme Court in 2012 struck down mandatory life without parole sentences for juveniles but allowed judges to use discretion in issuing such a sentence if the defendant is "the rare juvenile offender whose crime reflects irreparable corruption."
Malvo's case raised the prospect that the justices might further clarify their ruling and open the door for reduced sentences for hundreds of other juvenile offenders.
There are approximately 2,100 Americans serving life without parole for crimes committed as juveniles, according to The Sentencing Project.
If the court agrees to dismiss the case, those juvenile offenders would not receive the benefit of a potentially sweeping court ruling. Advocates hope that legislation like Virginia's will inspire other states to take steps to revisit life sentences for juveniles.
Malvo, 35, has been serving four life-without-parole sentences in Virginia and six life-without-parole sentences from Maryland. Oral arguments were heard at the Supreme Court in October.
He will be eligible for parole consideration in Virginia in 2022, Spinelli said. The Maryland sentences are unaffected.
"I was a monster," Malvo told the Washington Post in a 2012 interview from behind bars. "If you look up the definition, that's what a monster is. I was a ghoul. I was a thief. I stole people's lives. I did someone else's bidding just because they said so. ... There is no rhyme or reason or sense."
Muhammad was sentenced to death and executed in 2009.