Congress passed the measure by consensus on Wednesday, requiring employers to follow certain criteria to ensure the physical and mental health of employed children, and to prevent child exploitation.
"The age limit, as defined formally by the Code for Children and Adolescents, is 14 years old," Senator Adolfo Mendoza said after the enactment of the bill, which he co-sponsored.
But the new code allows exceptions, when specific legal criteria have been met, so that children may begin "working for others from age 12, which is allowed by international conventions, and self-employment from age 10."
The senator stressed that required factors include a voluntary decision from the child to work, consent from the parent or guardian and permission from the public ombudsman.
"The request is then filed with the Labour Ministry," Mendoza said.
The previous code, which allowed no exceptions to the 14-year-old minimum, had prompted protests from critics who stressed that, in Bolivia, children must work from an early age out of necessity.
By reducing the legal limit, lawmakers hope to help eradicate extreme poverty from the South American country by 2025, said bill co-sponsor Deputy Javier Zavaleta.
"Extreme poverty is of of the causes, not the main one, of child labour," he told AFP.
"So our goal is to eliminate child labour by 2020. While it is ambitious, it is possible."
The measure also establishes policies for adopting children, care and education of children with physical disabilities, and a maximum penalty of 30 years in jail for violent infanticides.
It was sent to President Evo Morales to be signed into law.