The amount includes a payment of $30,000 to each plaintiff, and a total $250,000 to cover their attorney fees.
"I want the university and the police to understand what they did wrong. Police should be accountable to students," a UC undergraduate said in a statement.
On November 18, police officers violently confronted anti-corporatism protesters camping on the UC Davis campus, sprayed the chemical irritant on students that were sitting on the ground and arrested 10 of them.
The demonstration was being held in solidarity with the worldwide Occupy movements that began in September 2011 after a group of people gathered in New York's financial district with the motto of "Occupy Wall Street" to protest "corporate greed," corruption, poverty, and social and economic inequality in the US.
US prosecutors will not file criminal charges against police officers who pepper-sprayed peaceful protesters at the University of California (UC), Davis last November.
On Wednesday, the UC officials agreed to pay about $1 million in damages to 21 students and recent graduates, who had prosecuted the university officials for the incident, Reuters reported.