The settlement approved by a judge with 19 plaintiffs is the latest development in a long-running case over the fate of the 36-storey 650 Fifth Avenue building.
Among the creditors are families and estates of victims of the 1983 bombings of US Marine barracks in Beirut that killed 241 military personnel and the 1996 bombing of the Khobar Towers in Saudi Arabia that killed 19 US service members.
US District Judge Katherine Forrest ruled in favour of the government's suit last year, saying the building's owners had violated Iran sanctions and money-laundering laws.
Prosecutors allege the building's owners, the Alavi Foundation - a non-profit corporation promoting Islamic culture and Persian language - and Assa Corporation, transferred rental income and other funds to Iran's state-owned Bank Melli.
US authorities will also sell Iran-linked properties in California, Maryland, Texas, Virginia and the Queens borough of New York, along with the contents of bank accounts formerly in the name of entities that served as fronts for Iran.
"With this settlement, we have taken an important step toward completing what will be the largest ever terrorism-related forfeiture and providing a substantial recovery for victims of terrorism," Manhattan US Attorney Preet Bharara said.
The government would recoup litigation expenses and costs associated with the sale of any properties seized and sold by the US Marshals Service, according to the settlement.
The remaining proceeds would be distributed among the plaintiffs based on the unpaid damages awarded to them.