The landmark class action claimed about 35 per cent of embryos found to be abnormal by the flawed testing were actually normal and could have potentially resulted in viable pregnancy.
It was also alleged company employees doctored the results of a clinical trial, forged patient signatures on consent forms and burned documents.
Margalit Injury Lawyers' managing principal Michel Margalit, who has been leading the class action for four years, said the settlement would finally bring some justice for her clients.
"If these remarkable women and men had not brought this class action Monash IVF's secret would have remained hidden," Ms Margalit said.
"The wellbeing of patients should be at the forefront of any IVF providers framework."
Monash IVF Group confirmed it had reached the settlement, which was still subject to approval from the Supreme Court of Victoria.
"In reaching an agreement through mediation, Monash IVF Group has made no admission of liability," a company spokeswoman said in a statement.
"While we have defended the claim, we believe it is in the best interests of our patients and people to resolve the matter rather than go to trial."
The trial was expected to start in the Victorian Supreme Court in October.
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