Prentice said he felt the law, which was passed under former premier Alison Redford but never proclaimed, was wrong, and that Albertans told him the same thing.
"I don't agree with the legislation. I don't agree with the content of the legislation," Prentice told reporters at Government House.
The act, the Public Services Sector Continuation Act, introduced six-figure fines on unions that engaged in illegal strikes or even spoke publicly about initiating such walkouts.
It was passed in December 2013 in response to an earlier wildcat walkout of prison guards and other security staff.
Unions were challenging the law in court, arguing it violated charter freedoms of speech and association.
Prentice said the legislation will be repealed in the spring session. He had previously said his government would review the province's labour laws after the Supreme Court ruled a Saskatchewan law that prevented public-sector employees from striking was unconstitutional.
Union leaders said repealing the legislation is the morally right thing to do, and the right thing to do legally given the legislation would not have survived a court challenge anyway.
"It had to go," said Heather Smith, president of the United Nurses of Alberta.
"That's just a no-brainer. It makes sense to get rid of it."
The legislation was accompanied by a law that imposed a contract deal and took away the right of arbitration for Alberta's largest public sector union, the Alberta Union of Provincial Employees.
It was just one of many controversial actions by Redford that ignited a backlash of anger in late 2013 and early 2014 that caused her popularity numbers to plunge, opening the door to a caucus and party revolt that forced her to resign a year ago Thursday.
Prentice himself has publicly squared off with union leaders in recent weeks.
He has hinted at taking action on public sector wages, labelling them too lavish and an obstacle to fixing Alberta's faltering economy.
Union members have fired back, launching a cheeky advertising campaign featuring Prentice as the cartoon captain of a floundering ship made unseaworthy by tax giveaways to corporations and the wealthy.
Prentice said Thursday's meeting was to "reset the table" with the unions. He reiterated he would not force open existing contracts to claw back wages to top up a treasury he says will be short $7 billion next year due to collapsing oil prices.
Guy Smith, president of AUPE, said he was pleased with the tenor of the discussions and with Prentice's decision to repeal the strike penalty law.
But he said he did deliver a message in person that public sector workers should not be a scapegoat for the Tories' past financial decisions.
"I did tell (Prentice) that the comments he's made about our members and their wages have done nothing but hurt morale on the front lines," said Smith.
"Our members know that they are not the cause of the fiscal problem the government finds itself in."
Prentice and Finance Minister Robin Campbell will deliver the next budget along with a 10-year-plan designed to shelter Alberta's day-to-day spending from future swings in oil prices, on March 26.