The deal, finalized after months of negotiations, marks a major step toward quieting the crisis that has torn at the fabric of America's fourth-largest archdiocese for nearly two years and spread throughout the country and beyond.
Under the terms of the agreement, victims would receive awards ranging from $80,000 to $300,000, said attorney Roderick MacLeish Jr., whose firm represents nearly half of the alleged victims.
Parents who filed lawsuits claiming their children were abused would receive $20,000.
Award amounts will be decided by a mediator, based on the type of molestation, the duration of the abuse, and the injury suffered.
The $85 million deal comes about a month after the archdiocese put a $55 million offer on the table, leading to intensified talks among a small group of lawyers who were negotiating on behalf of 550 alleged victims.
Many of the final details of the deal were worked out during a closed-door meeting Sunday night among lawyers — attended by Archbishop Sean O'Malley — that went on for hours and into early Monday morning.
"There's no way that you can possibly compensate people for what has been taken away from them. But this, for some, will be recognition by the archdiocese that terrible, horrific mistakes were made by church leadership, and this is a form of repentance by the church," MacLeish said.
A resolution had been elusive since the scandal exploded in January 2002 with the release of court documents in the case of the Rev. John Geoghan, who was moved from parish to parish despite evidence he had molested children.
Allegations against dozens of other priests soon came to light, and hundreds of lawsuits were filed against the archdiocese.
Priest personnel files, made public because of the Boston lawsuits, held sordid and shocking allegations: that a priest pulled boys out of religious classes and raped them in a confessional; that another fathered two children and left the children's mother alone as she overdosed; that another seduced girls studying to become nuns by telling them he was "the second coming of Christ."
The crisis put every U.S. diocese under new scrutiny.
Because of molestation claims, at least 325 of America's 46,000 priests were removed from duty or resigned in the year following the Geoghan case. And Cardinal Bernard Law resigned as Boston archbishop in December, giving up his post as spiritual leader to 2.1 million Catholics because of his mishandling of abuse cases.
The appointment of his successor, O'Malley, a Capuchin Franciscan friar known for helping other dioceses recover from sex abuse scandals, brought new hope in July.
The $85 million settlement is by far the biggest publicly disclosed payout made by the U.S. church, although the amount of compensation per person may be smaller than what some individuals have received in other cases.
The most comparable deal came in June, when the Archdiocese of Louisville, Ky., agreed to pay $25.7 million to 243 people.
A jury awarded nearly $120 million to 11 victims of former Dallas priest Rudy Kos, but the victims agreed in 1998 to a reduced settlement of about $31 million. And a jury in California awarded $30 million to two brothers molested in the Diocese of Stockton, but that award was later cut to $13 million.
Criminal charges were filed against some priests as a result of the Boston scandal, but Massachusetts Attorney General Thomas Reilly said no church leaders could be charged for supervisory lapses under weak child protection laws in effect at the time.
Reilly, in a report issued in July after a 16-month investigation, estimated that more than 1,000 children were likely victimized by more than 235 priests from 1940 to 2000 as church officials shifted priests from parish to parish, rather than removing them from ministry.
He said the abuse was allowed to continue because of an "institutional acceptance" and a "massive, inexcusable failure" by church leaders to do anything about it.
In September 2002, the Boston Archdiocese agreed to a $10 million settlement for 86 victims of Geoghan, who was ousted from the priesthood and sentenced to prison for child molestation. Geoghan, 68, was killed last month in prison, allegedly by another inmate who authorities say plotted the attack for more than a month.