Some constitutional rights were suspended, including allowing authorities to make arrests without a warrant, and giving the government access to citizens' communication.
El Salvador has the highest incarceration rate in the world, with nearly two percent of its adult population behind bars.
The rising inmate population as a result of the anti-gang measures, which the vast majority of the population supports, has stretched the country's already overwhelmed prison system. The largest prison in El Salvadoran, La Esperanza, holds 33,000 people despite a capacity of 10,000.
El Salvadoran prisons director Osiris Luna said the new prison would span over 166 hectares 410 acres, while 600 troops and 250 police officers will secure it.
All those home boys, those terrorists in the organization that made our beloved Salvadoran people suffer, will be housed and subjected to a severe regimen, Luna said on state television.
By the year 2021, El Salvador's prison system had 20 penal centers with capacity for 30,000 holding 35,976 prisoners.