The development comes in the wake of the recent violent agitation by farmers, demanding increased price for sugarcane.
The board will be headed by the state's Chief Secretary and include some other officials and representatives of sugar factories and farmers.
The cabinet also approved the draft Maharashtra Sugarcane (Purchase and Supply) Bill 2013, expected to be tabled in the winter session of the state legislature in Nagpur.
Maharashtra has 202 registered co-operative sugar factories and over 65 private ones.
The board would function on the lines of state electricity regulatory commission.
Norms for beneficiaries under the National Food Security Act too were approved.