Carmaker Volkswagen is paying £193million to 91,000 drivers who had emissions-cheating software installed in their cars.
The out-of-court settlement means the average driver will get £2,120.
The issue, dubbed "dieselgate", is that many diesel cars were made with "defeat devices", often in the form of software code, that cheated emissions tests.
These tests have to be passed in many countries before a car can be sold.
The devices meant many vehicles were actually more polluting than advertised.
After the issue came out in 2015, law firms started gathering up drivers to sue carmakers, saying they may have overpaid for their cars.
The 91,000 drivers were part of a class action brought by law firms Slater and Gordon, Leigh Day and PGMBM.
Volkswagen will also pay the legal fees of the drivers, all from England and Wales.
The car firm added: "The Volkswagen Group would, once again, like to take this opportunity to sincerely apologise to their customers for the two mode software installed in the EA189 vehicles.
"The Volkswagen Group will continue to work to rebuild the trust of their customers here in England & Wales.
"This settlement represents an important further stage in that process."
However, Volkswagen is not admitting it did anything wrong.
A statement from the carmaker said: "No admissions in respect of liability, causation or loss have been made by any of the defendants in the group action as part of the settlement."
Instead, Volkswagen said it was cheaper to pay out rather than go to court.
Its statement said: "In Volkswagen's view, the legal costs of litigating this case to a six-month trial in England, and then in relation to any further appeals by either party, were such that settlement was the most prudent course of action commercially."
Slater and Gordon chief executive David Whitmore said: "The settlement avoids the need for a lengthy, complex and expensive trial process and we are delighted to have achieved this settlement for our customers as a result of the group action."
Lawyers say the issue may also affect brands like Audi, BMW, Chrysler, Citroen, Fiat, Ford, Hyundai, Jaguar, Kia, Land Rover, Mini, Mercedes-Benz, Nissan, Peugeot, Porsche, Renault, Seat, Skoda, Vauxhall and Volvo.
All the carmakers have denied any wrongdoing.
