The veto comes after opposition from the business community and law enforcement authorities, including top officials with the Oklahoma State Bureau of Investigation who have said it could erode public safety.
The bill written by Republican Sen. In 2014, she vetoed a bill requiring state authorities to sign off on applications for federally-regulated items such as silencers, short-barreled rifles and automatic weapons within 15 days.
Her decision outraged gay rights groups.
"I believe the firearms laws we now have in place are effective, appropriate and minimal", she said.
Many business leaders, including local chambers of commerce, also opposed the bill, giving the governor - who can not run for re-election under term limits - plenty of political cover to veto it.
Several Republican candidates to succeed Fallin as governor urged her this week to sign it. It gives special permission to religiously-affiliated government-funded child welfare agencies to place the agencies' beliefs above the needs and best interests of children in care and discriminate against parents who are trying to provide a loving home.
Writes Currey Cook, Counsel and Director, Youth in Out-of-Home Care Project, Lambda Legal: "With the stroke of a pen, Oklahoma Gov. Mary Fallin earns the dubious honor of becoming the first governor in 2018 to write anti-LGBT discrimination into law and withhold loving homes from Oklahoma children".
The NRA had supported the bill's passage and had urged Fallin to sign it. "The Oklahoma legislature has played politics with their state's most vulnerable kids".
"Our message to Governor Fallin, and the lawmakers who championed this travesty is simple: we'll see you in court!" added Stevenson.
The adoption law goes into effect November 1.
Fallin argued in a statement that the bill will not restrict LGBTQ and same-sex couples from adopting or fostering children, and says that states that do not allow faith-based child placement groups to reject same-sex couples have had these organizations leave the state.
Fallin vetoed the bill that would have removed the jury from its role in sentencing offenders younger than 18 and put the responsibility exclusively in the hands of a judge.
Many states across the country are eliminating no-parole sentences for crimes committed before an offender turns 18 after the U.S. Supreme Court said such sentences should be reserved for the "rarest of juvenile offenders".