The Indian Residential School Settlement Agreement was forged by the Government of Canada, Survivors' lawyers, the Assembly of First Nations, Inuit representatives, other Indigenous organizations, and representatives from the Catholic, United, Anglican, and Presbyterian Churches. Former Supreme Court Justice Frank Iacobucci had been appointed by Canada to serve as its negotiator on 31 May 2005. The agreement was signed on 24 April 2006 and approved by the Harper government on 10 May 2006 and the Court of Queens Bench in Regina, Saskatchewan on 15 December 2006. It went into effect on 19 September 2007.

The Settlement Agreement, which applied to First Nations, Inuit, Inuvialuit, and Métis students, included two forms of monetary compensation—the Common Experience Payment, which provided money based on time spent in schools—and the Independent Assessment Process, for individuals who experienced physical and/or sexual abuse. Additional funding was given to the Aboriginal Healing Foundation. The Agreement also created a commemoration fund and called for the creation of a Truth and Reconciliation Commission. Canada and the four churches were to cover the administration of the agreement and the compensation of Survivors. As part of the settlement, Canada signed separate agreements with representatives from each of the four churches.