The shooting of Philando Castile last year made international headlines after his girlfriend broadcast the aftermath live on Facebook.
A civil lawsuit for wrongful death has concluded with the news that Valerie Castile, his mother, will receive the money from the city of St Anthony.
The Hispanic police officer who shot him was acquitted of manslaughter.
Mr Castile, a 32-year-old school cafeteria worker, was stopped by police last July and the encounter began cordially.
Police officer Jeronimo Yanez informed him his brake light was out and asked for his insurance and licence.
But when Mr Castile politely told the officer about the gun he was legally carrying, things became tense and seconds later the officer opened fire, after shouting "Don't reach for it!"
Last week, the family of a black man shot in Ferguson, Missouri, reached a $1.5m settlement over his death, which sparked riots and a national debate about police use of lethal force against African Americans.
The family of a black driver killed by a police officer during a traffic stop in Minnesota will receive $3m (Â£2.4m).