On Nov. 18 students gathered to protest against rising tuition costs and reduced services.
Each of the 21 students and former students will receive $30,000 and a personal written apology from Chancellor Linda Katehi.
There will be a pool of $100,000 to pay others who come forward.
The settlement, which will be paid out of UC Davis's self-insurance fund, also calls for the payment of $250,000 in legal fees and costs to the lawyers who filed the suit.
The deal was agreed to in mediation sessions after the 21 students sued last February and still must be approved by a federal judge.