(CNN) -- Arizona Gov. Jan Brewer said Wednesday that she has vetoed a bill that would have allowed businesses that asserted their religious beliefs the right to deny service to gay and lesbian customers.
Opinions have been sharply divided over the politically charged measure, with both sides ramping up pressure on Brewer after the state's Republican-led legislature approved the bill last week.
Brewer said she made the decision she knew was right for her state.
"I call them as I see them, despite the cheers or the boos from the crowd," she said, calling the bill "broadly worded" and saying it could have unintended consequences.
Brewer said she'd weighed the arguments on both sides.
"To the supporters of the legislation, I want you to know that I understand that long-held norms about marriage and family are being challenged as never before. Our society is undergoing many dramatic changes," she said. "However, I sincerely believe that Senate Bill 1062 has the potential to create more problems than it purports to solve. It could divide Arizona in ways we cannot even imagine and no one would ever want.
"Religious liberty is a core American and Arizona value, so is non-discrimination."
Her announcement spurred cheering and hugs by protesters of the bill in Phoenix.
The measure, known as SB 1062, would have given Arizona businesses that assert their religious beliefs the right to deny service to gay and lesbian customers.
Opponents said it encouraged discrimination against gays and lesbians, while supporters argued it allowed for religious freedom.
Brewer returned home on Tuesday from a weekend in Washington with her state roiling over a values clash between arch conservatives and gay rights advocates. The state battle has national implications, as the issues it deals with play out in different ways in courts, state legislatures and on Main Street across the country.
The Arizona measure is particularly pointed and had vocal supporters behind it. They contended it was their legal right to oppose what they see as a gay-rights agenda nationally.
In addition to gay rights organizations, many businesses sharply criticized the measure, saying it would be bad for Arizona's economy and could lead to discrimination lawsuits, boycotts and other disruptions.
Before she vetoed the bill, Brewer wouldn't reveal her intentions in an interview with CNN on Monday in Washington, where she attended a meeting of governors.
"I can assure you, as always, I will do the right thing for the state of Arizona," she said.
The bill also drew fire from some Republican lawmakers with generally social conservative beliefs.
Arizona Sens. John McCain and Jeff Flake publicly urged Brewer to veto the measure, citing worries about the economic impact on the state's businesses.
Former Massachusetts governor and Republican presidential nominee Mitt Romney recently tweeted that a veto of the bill was the right course.
Large businesses including Apple, American Airlines, AT&T, and Intel voiced opposition, and the Arizona Super Bowl Host Committee expressed concerns.
State Rep. Heather Carter, one of three state house Republicans who voted against this bill, said her phone started ringing as soon as it passed the state's Senate.
A "groundswell" of phone calls and e-mails from friends, family, and other people she respects, she said, told her "you can't vote for this bill, it's a bad bill."
This reaction, she said, told her something. She could not vote for the bill if there was "even the off-chance that discrimination could happen."
But supporters of the bill have been just as vocal.
The measure, which was pushed by the Center for Arizona Policy, a conservative group opposed to abortion and same-sex marriage, has also drawn staunch support from those who say the federal courts have increasingly pushed a pro-gay rights agenda.
Conservative radio host Rush Limbaugh said on his show that Brewer is "being bullied by the homosexual lobby in Arizona and elsewhere" on the measure.
A double standard?
Supporters also see, in the opposition, a double standard in how the rights of gays and lesbians are supported versus those who have conservative religious views.
"I think what we need to do is respect both sides. We need to respect both opinions," Minnesota Republican Rep. Michele Bachmann said Wednesday. "Just like we need to observe tolerance for the gay and lesbian community, we need to have tolerance for the community of people who hold sincerely held religious beliefs."
If the tables were turned, Republican Arizona state Rep. Sonny Borrelli said, many opponents of the measure wouldn't be nearly as tolerant as they claim.
"You have a gay person that owns a printing shop, OK. Somebody from the Westboro Baptist Church comes in there and demands that they print and sign that, obviously, the printer is not going to agree with," he said. "Should that religious group demand that print shop print that thing?"
After the bill passed, Rocco's Little Chicago Pizzeria in Tucson placed a sign in its window stating "We reserve the right to refuse service to Arizona legislators."
The restaurant's Facebook page received more than 20,000 likes for the sign and comments from fans saying things like "Y'all rock! Stand up for human rights!"
Gay-rights activists have stood outside the state Capitol building in Phoenix for days protesting the measure.
The Arizona Catholic Conference released a statement urging supporters to encourage Brewer to sign the bill into law.
"The threats to religious liberty have become very real... S.B. 1062 will help avoid the situations being experienced around the country where businesses are being forced to close because of their owners' faith," the organization's statement read.
CNN's Leigh Ann Caldwell, Catherine E. Shoichet, Ana Cabrera and Dana Bash contributed to this report.