Civil penalties under the settlement total approximately 400 million dollars, payable to various U.S. federal and state authorities that have accused FCA of using defeat devices to cheat emissions tests.
FCA's U.S. subsidiary has agreed to provide free software update for an estimated 100,000 vehicles, which don't require any hardware modification. The recall involves model-year 2014-2016 Ram 1500 pickups and Jeep Grand Cherokee SUVs equipped with 3.0-liter EcoDiesel V-6 engines.
Meanwhile, each eligible customer affected by the recall will receive an average of 2,800 dollars in compensation.
However, FCA maintains its position that the company did not engage in any "deliberate scheme" to install defeat devices to cheat emissions tests.
"The consent decree and settlement agreements contain no finding or admission with regard to any alleged violations," FCA said in a statement.
The settlement now awaits U.S. judicial approval.