Officials said the money will be distributed among 343 plaintiffs in connection with police actions during the protests that erupted in West Philadelphia and along the Vine Street Expressway (I-676) in Center City.
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Police fired tear gas at dozens of protesters trapped on I-676 by SWAT team officers on both sides. Many were unable to retreat to an on-ramp and clambered to get up a steep embankment and over a concrete wall and fence.
"The absurdity of being a subject of police brutality, during a protest against police brutality, was not lost on us," said Ed Parker, who was among the protesters on the expressway.
Three demonstrators on the highway were sprayed at close range in their faces by former police officer Richard Nicoletti, who was later arrested and charged with assault.
Meanwhile, attorneys for plaintiffs in West Philadelphia's 52nd Street Corridor - in the heart of a predominantly Black neighborhood - said witnesses reported residential communities turned into a war zone, with tanks traveling on side streets "chasing residents into their homes and indiscriminately firing canisters of tear gas at them."
"We believe that today's settlement is a long overdue and frank recognition of the stark violence that police inflicted on West Philadelphia residents and protesters. The settlement also recognizes the continued significance of calls for justice and police accountability," said Charles McLaurin, Senior Counsel for the Legal Defense Fund.
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Mayor Jim Kenney said this is one step in the direction toward reconciliation.
"The pain and trauma caused by a legacy of systemic racism and police brutality against Black and Brown Philadelphians is immeasurable," Kenney said in a statement. "While this is just one step in the direction toward reconciliation, we hope this settlement will provide some healing."
Kenney and Police Commissioner Danielle Outlaw faced harsh criticism in two audits of the planning and response to the protests, which included multiple clashes, the burning of police cars and instances of opportunistic thefts and vandalism in business districts.
One review cited failures in planning that researchers said led to short staffing, emotional responses from officers and sometimes excessive uses of force.
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"We will continue to work non-stop towards improving what we as police do to protect the first amendment rights of protestors, keep our communities and officers safe, and to ultimately prove that we are committed to a higher standard," Outlaw said in a statement.
In addition, the city said a grant will provide between $500,000 to $600,000 to the Bread & Roses Community Fund to provide free mental health counseling for residents in West Philadelphia.
The counseling will be available to all residents within a radius of the 52nd Street corridor, the city said, not just plaintiffs in the lawsuit.
The Associated Press contributed to this report.