The school also agreed to set up a memorial to DuBose on campus, invite the family to take part in meetings on police reform and issue a formal apology, a press release from the family said.
The university will pay $4,850,000 to the family and also provide free undergraduate education to DuBose's 12 children. the statement said. The education is valued about $500,000.
"The family is taking Martin Luther King's words to heart," Al Gerhardstein, a lawyer representing the family, said at the press conference, according to CNN afiliate WCPO. "He told us to be peaceful when we are faced with tragedy, and this family has worked peacefully over the last few months to resolve this terrible, terrible tragedy."
Officer Ray Tensing fatally shot DuBose, 43, during a July 19 traffic stop over an alleged missing license tag.
The officer has said he was forced to fire his weapon after almost being run over. Authorities indicted Tensing on murder and voluntary manslaughter charges, partly because they felt body camera video contradicted his story.
The shooting outraged the African-American community in Cincinnati and Hamilton County Prosecutor Joe Deters. DuBose was black and Tensing is white.
"I've been doing this for over 30 years. This is the most asinine act I've ever seen a police officer make -- totally unwarranted," Deters said in the days after the shooting. "It's an absolute tragedy in the year 2015 that anyone would behave in this manner. It was senseless."
Tensing has pleaded not guilty and is free under $1 million bond. A pretrial hearing is scheduled for February 11, according to cincinnati.com.
When asked if the settlement indicated an acknowledgment of guilt from the university, UC attorney Nate Lampley Jr. said to WCPO, "It is an acknowledgment of a tragedy and an attempt to resolve it in a manner that was fair to both sides."
According to the press release, University of Cincinnati President Santa Ono said, "I want to again express on behalf of the University of Cincinnati community our deepest sadness and regrets at the heartbreaking loss of the life of Samuel DuBose. This agreement is also part of the healing process not only for the family but also for our university and Cincinnati communities."