The Guardian has reported that it is believed to be the first statute of its kind in the US.
Madison has banned discrimination against the non-religious, giving atheists the same protections afforded to people based on their race, sexual orientation and religion, among other reasons.
It comes after religious freedom bills were passed in Indiana and Arkansas last month to protect individuals or businesses owners who want to refuse services on the grounds it goes against their beliefs.
The Guardian says Madison is a liberal island in a conservative state, however the bills ordinance's author Anita Weiner said the bill was not the result of an actual complaint about alleged discrimination based on a lack of religious faith.
She said: "It just seems to me that religion has spread into government more than I feel comfortable with.
"It just occurred to me that religion was protected, so non-religion should be, too." She also stressed it was a separate issue to the religious laws that have received heavy criticism in Indiana and Arkansas.
Both religious freedom bills have been accused of protecting people who want to discriminate and use religious reasons to do so.
There was no official opposition when the council passed the law last month; however some people are querying the need to protect atheists in liberal Madison.
Julaine Appling, the president of Wisconsin Family Action, said: "I don't understand why they would add this to that litany of protections in Madison, of all places," she said. "I thought this was an April Fools' joke."
But atheists and other non-believers say the statute marks an important step forward for those who do not identify as religious.
Todd Stiefel, the president of Openly Secular, a group that helps people become open about their lack of faith, said: "I think Madison is way ahead of the curve."
Todd Stiefel said people who tell their employers or family members that they are not religious face rejection and harassment.
"It boils down to the misinformation and prejudice that gets passed down generation to generation.
"People have been raised being told that atheists are evil and they eat babies and they can't be trusted."
