Members of the Chicago City Council approved the settlement on Wednesday.
More than 500,000 people could be eligible for reimbursement.
The lawsuit was filed in 2004 and claimed an institutionalized system of police torture existed.
Some of the alleged victims described Wednesday what it was like to be detained by police.
"It was just a pure nightmare - you dont have no real rest - nothing comfortable to rest on, and you don't fed," said one alleged victim.
"It's real emotional - you know - to first to be dealing with the crime - then actually trying to have to make a true statement under pressure," said another alleged victim.
An attorney for the City of Chicago says the city will pay $15 million and an insurer will pay for the remainder of the settlement.