Attorney General Jerry Brown announced the agreement last week in the 2008 suit against Dalton, Ga.-based AstroTurf and other makers of synthetic turf filed under California's Proposition 65 law.
The proposition approved by voters in 1986 requires products to carry warning labels if they contain chemicals known to the state to cause cancer or birth defects.
Under the agreement, AstroTurf agreed to reformulate its products to reduce traces of lead. Lead had been used to keep green colors from fading over time.
All three companies sued by Brown maintain that all artificial turf sold in California is safe.
The attorney general's office said it found excessive lead levels in some artificial-turf samples it tested from the three companies prior to filing the lawsuit. Children and other individuals can ingest harmful levels of lead by absorbing it through the skin or rubbing the ersatz grass and then touching food or their mouths, the suit said.
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