The agreements include C$20 billion for potentially hundreds of thousands of First Nations children who were removed from their families, who did not get services or who experienced delays in receiving services. Another C$20 billion is to reform the system over the next five years.
The government said last month it was setting aside C$40 billion for compensation and reform but announced the details on Tuesday. The agreements come almost 15 years after the First Nations Child and Family Caring Society brought forward a human rights complaint.
The reform deal includes C$2,500 in preventive care per child and provisions for children in foster care to receive support beyond age 18.
Funding aimed at reform and preventive services should start flowing in April but these agreements are not yet final and they may not end the legal battle, said Cindy Blackstock, executive director of the First Nations Child and Family Caring Society.
"I see it as words on paper," she told Reuters.
"I judge victory when I can walk into a community and a child is able to say to me, 'My life is better than it was yesterday.' Nothing in these words actually changes children's lives until it's implemented."
Indigenous children are over-represented in foster care across Canada.
Canada's Human Rights Tribunal repeatedly found child and family services discriminated against First Nations children, in part by under-funding services on reserves so children were removed from their homes and taken off-reserve to get those services.
Canada admitted its systems were discriminatory but repeatedly fought orders for it to pay compensation and fund reforms, including in a federal court case it lost last year and sought to appeal, and an attempt it announced last summer to overturn another tribunal decision ordering funding of capital assets and preventive services.