The City Council voted to settle the three-year case on Tuesday night. The agreement also must be approved by a federal judge.
It calls for five residents to split $180,000, with lawyers to be paid the remainder of the settlement.
The residents had sought millions of dollars. City officials said Wednesday they agreed to settle the case to avoid the expense of a trial.
The city denied targeting the low-income black renters but agreed as part of the settlement to refrain from basing police actions on a resident's status as a receiver of a federal subsidy known as Section 8 vouchers.
"This lawsuit was an attempt to take community policing -- neighbors and police working together to build safer neighborhoods -- and portray it as an elaborate and sinister conspiracy," said City Attorney Lynn Tracy Nerlan. "Our city's community policing programs have always been fair, unbiased and focused on addressing criminal, drug and nuisance activities."
A federal judge last year refused to toss out the lawsuit and certified the case as a class action on behalf of all black Antioch residents who receive the federal rent vouchers. However, the judge greatly limited the amount of monetary damage the residents could collect and essentially limited the case to addressing Police Department actions.
Brad Seligman, a lawyer for the plaintiffs, said the city will be under court supervision for three years to ensure police don't target residents solely because of their rental status.
"Changing the behavior of the Police Department was always our primary goal," Seligman said.
The residents filed the lawsuit after complaining about police harassment for years. They claim they were targeted because of the city's changing demographics and scapegoated for rising crime rates.
Public Advocates Inc., a nonprofit legal aid organization, claimed 66 percent of all investigations of the special police squad at the center of the lawsuit were aimed at voucher recipients who comprise 5 percent of the population.
Between 2000 and 2007, Antioch's black population nearly doubled from 8,824 to 16,316. And the number of Antioch renters receiving federal subsidies climbed almost 50 percent between 2003 and 2007 to 1,582, the majority of them black.
Longtime homeowners complained the new arrivals brought crime and other troubles. In 2006, violent crime in Antioch shot up about 19 percent from the year before, while property crime went down slightly.
"It's a relief that this is finally resolved and that people will be watching to make sure Antioch doesn't try to push out any other families like mine," said Santeya Williams, the lead plaintiff in the lawsuit and a former Antioch renter who lived in housing subsidized by Section 8.