The Boston Archdiocese has agreed to pay $85 million to settle more than 550 court claims from people who allege Roman Catholic priests abused them.
It is the largest known payout by an American diocese to settle sex abuse charges.
The 85 million dollar deal, finalised after months of negotiations, marks a major step towards ending the crisis that has torn at the fabric of America's fourth-largest archdiocese for nearly two years.
Under the agreement, victims will receive awards ranging from £50,000 to £135,000, said lawyer Roderick MacLeish Jr, whose firm represents nearly half of the alleged victims.
Amounts will be decided by a mediator, based on the type of abuse, the duration and the injury suffered. Parents who claimed their children were abused will receive £12,000.
Mr MacLeish said: "There's no way that you can possibly compensate people for what has been taken away from them. But this, for some, will be recognition by the archdiocese that terrible, horrific mistakes were made by church leadership, and this is a form of repentance by the church."
The scandal exploded in January 2002 with the release of court documents in the case of the Rev John Geoghan, who church leaders moved from parish to parish despite evidence he had molested children.
Allegations against dozens of other priests soon came to light, and hundreds of lawsuits were filed against the archdiocese.
Because of the abuse claims, at least 325 of America's 46,000 priests were removed from duty or resigned in the year following the Geoghan case. Cardinal Bernard Law resigned as Boston archbishop in December because of his mishandling of abuse cases.
In September 2002, the Boston Archdiocese agreed to a 10 million dollar settlement for 86 victims of Geoghan, who was ousted from the priesthood and sentenced to prison for child abuse. Geoghan, 68, was killed last month in prison, allegedly by another inmate.