The money will be split evenly, with $2.1 million going to each woman, said Frank Mateljan, a spokesman for the city attorney's office.
The agreement must still be approved by the Los Angeles City Council.
Margie Carranza and her 71-year-old mother, Emma Hernandez, were delivering papers around 5 a.m. on Feb. 7 when LAPD officers guarding the Torrance home of a target named in an online Dorner manifesto blasted at least 100 rounds at their pickup.
Hernandez was shot in the back and Carranza had minor injuries.
The settlement means they cannot pursue any future injury claims against the city.
Dorner had vowed warfare on Los Angeles Police Department officers and their families for what he called an unfair firing.
He killed four people, including two law enforcement officers, during his nearly one-week run from authorities.
Attorney Glen Jonas, who represents the women, called the settlement amount fair and said it spared the city from defending a case that involved eight police officers and would have likely cost millions of dollars.
"The only certainty was the litigation was going to cost everyone a lot of money and a lot of time," Jonas said.
Jonas sent a nine-page demand to the city more than a month ago that provided an opening to negotiations. He said he negotiated with City Attorney Carmen Trutanich for weeks before the deal was reached on Monday night.
"We're two veteran trial lawyers trying to settle a case, and we both understand the reality of litigation and what it costs to both sides," Jonas said.
Trutanich agreed the settlement was fair and said in a statement he was pleased by how swiftly it was reached.
"We hope Margie and Emma will be able to move on with their lives, the city will be spared millions of dollars in litigation expense and time, and this unfortunate chapter of the Dorner saga will be put to rest," Trutanich said.
The women agreed to receive the payment after June 30 - the end of the fiscal year - to help the city with its budgeting, Jonas said. The agreement came in addition to a separate $40,000 settlement reached earlier for the loss of the women's pickup truck.
"For them, the money is not the issue as much as (the city) just doing the right thing," Jonas said. "Everyone agreed that they were wronged, but we didn't know whether responsibility would be assumed ... It's pleasant to get that done without having to go through years of litigation."
The eight officers remain assigned to non-field duties pending an internal investigation.