The United States city of Cleveland will pay $US6 million to the family of black 12-year-old Tamir Rice who was shot and killed by police in 2014.
He was playing with a pellet gun outside a recreation centre when he was shot by a white police officer.
A grand jury declined to bring charges against the police.
Tamir's death sparked protests in Cleveland at a time when the deaths of black men at the hands of police had sparked a national debate.
It became a focal point for the "Black Lives Matter" movement.
An order filed in the US District Court in Cleveland said the parties in the case agreed on the sum of $US6m - half to be paid in 2016 and the remainder the following year.
The estate of Tamir Rice would receive $US5.5m, with $US250,000 going to his mother, Samaria, and $US250,000 to a recipient listed as TR.
The settlement would carry no admissions of any wrongdoing.
"Although historic in financial terms, no amount of money can adequately compensate for the loss of a life," Subodh Chandra, the Rice family's attorney, said in response to the reported settlement.
"It is the Rice family's sincere hope that Tamir's death will stimulate a movement for genuine change in our society and our nation's policing," he added.
Cleveland Mayor Frank Jackson said at a news conference he would not elaborate on the settlement or how the city would pay for it. "There is no price you can put on the loss of a 12-year-old child."
The two officers have been on restricted duty since the shooting and will remain so through an internal police review.
Video of the incident showed a police cruiser pulling up close to the boy outside the centre on 22 November 2014.
One of the two police officers inside, rookie patrolman Timothy Loehmann, jumps out and fires his service weapon twice. Tamir died the next day.
Police maintained that the pellet gun had looked real and that they had asked him to raise his hands three times.
The shooting incident lasted just two seconds, and Tamir's family said the video footage showed the police had acted too quickly.
Although a grand jury declined to bring charges, the US Department of Justice was investigating any possible infringement of federal civil rights.
Analysts said the settlement showed neither the Rice family nor the city wanted to pursue a high-profile and potentially long-lasting legal case.
- BBC / Reuters