Bruce Godschalk, 44, had previously agreed to accept $740,000 from Montgomery County to settle the same claims, making his total settlement more than $2.3 million.
"We still don't think we did anything wrong," said Joseph J. Pizonka, the Upper Merion solicitor. "But we got to thinking, 'He spent 15 years of his life in prison. What is that worth?'"
Godschalk, who lives in South Carolina, declined to comment on the township settlement.
"We are satisfied with the results," said his lawyer, David Rudovsky.
Godschalk filed his lawsuit in September 2002, seven months after he left prison, alleging in part that two detectives tricked and coerced him into confessing.
Sentenced to 10 to 20 years in prison in 1987, he was freed in February 2002 after being exonerated by DNA tests.