Daniels filed a lawsuit against several Columbus police officers in January, alleging they conspired to retaliate against her because of her claims she had an affair with President Trump in 2006, a decade before he was elected president.
Meredith Tucker, a spokeswoman for the Columbus city attorney's office, told Fox News an agreement was reached after mediation. She said all parties involved agreed the figure was a fair settlement "based on the facts and circumstances involved."
Messages to Daniels' attorney were not immediately returned.
Daniels, whose real name is Stephanie Clifford, was arrested in July 2018 and accused of inappropriately touching a female undercover officer while performing at the club. The arrest sparked criticism, and the city attorney's office dropped charges within hours.
Daniels' lawyer at the time, Michael Avenatti, claimed the arresting officers posted pro-Trump messages on social media and accused them of seeking to defame Daniels after learning she was performing. An internal police review determined Daniels' arrest was improper but not planned in advance or politically motivated.
Officers chose to obtain evidence for alleged illegal touching of customers by dancers "by placing themselves, unnecessarily, at risk and potential for physical contact with Ms. Clifford," the March report concluded.
The city disbanded the police department's vice unit the same month as allegations of problems piled up, placing the investigation of vice-related crimes under the Narcotics division and promising a more community-based approach.
The interim Columbus police chief recommended this month that two officers from the former vice unit be fired for their roles in the undercover strip club operation that resulted in Daniels' arrest.
Chief Tom Quinlan also recommended suspensions for a lieutenant and sergeant, and a written reprimand for a commander. The city's safety director has the final say. The police union has called the recommended discipline excessive.
Daniels sued Trump last year, seeking to void a nondisclosure agreement she'd signed days before the 2016 election as part of a hush-money settlement.
The payout still has to be approved by the Columbus City Council, Tucker said. It was not clear when the governing body would take up the issue.
The Associated Press contributed to this report.