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The Department of Motor Vehicles (DMV) gave the scheme the go-ahead after conducting demonstrations on the Las Vegas Strip and in Carson City.
"It gets honked at more often because it's being safe," said Nevada DMV director Bruce Breslow.
Self-driving vehicle technology works like auto-pilot to guide a car - in this case a modified Prius - with little or no intervention from a human operator.
Laser radar mounted on the roof and in the radiator grill detects pedestrians, cyclists and other vehicles, creating a virtual buffer zone around the obstacles that the car then avoids.
Nevada's regulations require two people in the test cars at all times.
One person is behind the wheel, while the other person monitors a computer screen that shows the car's planned route and keeps tabs on roadway hazards and traffic lights.
If there is a glitch, the human driver can override the car with a tap on the brake or a hand on the steering wheel.
"They're designed to avoid distracted driving," Mr Breslow said.
"When you're on the Strip and there's a huge truck with a three scantily clad women on the side, the car only sees a box."
Google has applied to licence three test vehicles. Mr Breslow said the cars will display red number plates and an infinity symbol to represent their status as vehicles of the future.