The agreement provides up to $5 million per retired player for serious medical conditions associated with repeated head trauma.
While the lawsuit was a combination of hundreds of actions brought by more than 5,000 ex-NFL players, the settlement applies to all players who retired on or before July 7, 2014, according to Judge Anita Brody's 132-page decision.
It also applies to the family members of players who died before that date.
More than 200 former players opted out of the settlement to the lawsuit, which accused the NFL of hiding the dangers of concussions. They can sue the NFL separately.
The lawyers for the players applauded the ruling but cautioned an appeal could slow down the process of people who file claims getting their money.
"Today, these courageous men and their families have made history," attorneys Christopher Seeger and Sol Weiss said. "Despite the difficult health situations retired players face today, and that many more will unfortunately face in the future, they can take comfort that this settlement's benefits will be available soon, and will last for decades to come."
The lawyers said that if no appeals are filed, payments will begin this summer.
But "if any objector appeals the final approval order, however, no benefits will become available until this process is exhausted -- which will take months, if not years to resolve," they said.
One of the players who filed the first suit against the NFL, former fullback Kevin Turner, was happy for the players who need the money.
"What matters now is time, and many retired players do not have much left. I hope this settlement is implemented without delay so that we can finally start helping those in need," he said in a written statement. Turner has amyotrophic lateral sclerosis, or ALS.
The NFL said the players and their families would be eligible for "prompt and substantial benefits."
"Today's decision powerfully underscores the fairness and propriety of this historic settlement," said Jeff Pash, the NFL's top lawyer.
Age is a factor in compensation
There is no cap on the amount of funds available to pay the monetary awards and all valid claims will be paid in full for 65 years.
There are several categories, based on a doctor's diagnosis, with maximum payments ranging from $1.5 million to $5 million. For instance, an ex-player who is diagnosed with Alzheimer's or Parkinson's disease could receive up to $3.5 million.
The award might be less when service time or age of the retiree are factored in.
Initially there was a $765 million figure on the settlement with $675 million capped. Brody declined in January 2014 to approve the deal, saying she was concerned about the amount of money.
But another agreement reached in June eliminated a maximum for the monetary award fund. Brody gave her tentative approval to the deal two weeks later, but also held a hearing in November for people who wanted to comment on the fairness of the deal.
In February, she told the plaintiffs and the NFL to enhance the compensation for players who suffered from symptoms of CTE, chronic traumatic encephalopathy.
CTE is a progressive degenerative brain disease found in some athletes with a history of repetitive brain trauma. More than 50 former NFL players, including Junior Seau and Dave Duerson, have been posthumously diagnosed with the disease.
The settlement also will provide eligible retired players with baseline neurological exams.
People who want to file a claim must do so within 180 days of receiving notice the settlement is in effect.
CNN's David Close contributed to this report.