The plaintiffs agreed to a court-mediated settlement to end an 11-year legal battle against seven automakers, which include industry giants Toyota, Honda and Nissan, and government bodies.
More than 520 Tokyo residents had filed the lawsuit, blaming diesel gas fumes for causing their asthma. The plaintiffs said about 110 people who were previously part of the lawsuit have already died of their illnesses.
Asthma patients have regularly held noisy protests outside the headquarters of Nissan and other automakers they accused of dragging their feet on the row.
Under the settlement, the automakers alone will pay 3.3 billion yen (28.6 million dollars) to underwrite a five-year health plan for the asthma patients. The automakers will also pay a one-time 1.2 billion yen to the plaintiffs.
Plaintiff Hiroko Ozawa, 66, said the group welcomed the settlement reached last week in general terms, although they still needed to sort out specifics.
"One of the issues we have to address now is that the plan for healthcare benefits will be reviewed after five years," Ozawa said.
"Another issue is that the benefits will only be given to asthma patients, not to those suffering chronic bronchitis and other lung problems," she said. "But we accepted the settlement proposal because patients wouldn't have achieved anything if we had rejected it."
The health concerns date from before 2003, when authorities imposed strict regulations on diesel-engine exhaust emission in Tokyo and surrounding areas.
Japanese automakers have in recent years pioneered environmentally friendly cars, which have proven to be a major success, particularly in the US market.
Under the settlement, the Tokyo Metropolitan government agreed to pay around one-third of the 20 billion-yen cost for the health plan over the next five years.
It said it would push for a greater contribution by Tokyo's highway operator, Metropolitan Expressway Co., which said it can pitch in no more than 500 million yen.