Taylor's death sparked months of protests in Louisville and calls nationwide for the officers to be criminally charged. The state's attorney general, Daniel Cameron, is investigating police actions in the March 13 fatal shooting.
"I cannot begin to imagine Ms. Palmer's pain, and I am deeply, deeply sorry for Breonna's death," Fischer said, referring to Taylor's mother, Tamika Palmer.
At Tuesday's news conference, an emotional Palmer pushed for charges against the officers involved in the shooting.
"We must not lose focus on what the real job is, and with that being said, it's time to move forward with the criminal charges, because she deserves that and much more," Palmer said.
The lawsuit, filed in April by Palmer, alleged the police used flawed information when they obtained a "no-knock" warrant to enter the 26-year-old woman's apartment in March. Taylor and her boyfriend were roused from bed by police, and her boyfriend, Kenneth Walker, has said he fired once at the officers thinking it was an intruder. Investigators say police were returning fire when they shot Taylor several times. No drugs were found at her home.
"We won't let Breonna Taylor's life be swept under the rug," said Ben Crump, an attorney for Taylor's family.
Crump said the $12 million settlement is the largest such settlement given out for a Black woman killed by police. He also called for charges against the officers and urged people to "say her name," a phrase that has become a refrain for those outraged by the shooting.
Fischer said the civil settlement has nothing do with the criminal investigation.
The news conference was broadcast over a loudspeaker in downtown Louisville and protesters listened as they sat around a memorial to Taylor.
In the time since Taylor's shooting, her death - along with George Floyd and others - has become a rallying cry for protesters seeking a reckoning on racial justice and police reform. High-profile celebrities like Oprah Winfrey and LeBron James have called for the officers to be charged in Taylor's death.
Palmer's lawsuit accused three Louisville police officers of blindly firing into Taylor's apartment the night of the March raid, striking Taylor several times. One of the officers, Jonathan Mattingly, went into the home after the door was broken down and was struck in the leg by the gunshot from Walker.
The warrant was one of five issued in a wide-ranging investigation of a drug trafficking suspect who was a former boyfriend of Taylor's. That man, Jamarcus Glover, was arrested at a different location about 10 miles (16 kilometers) away from Taylor's apartment on the same evening.
The settlement includes reforms on how warrants are handled by police, Mayor Fischer said.
The city has already taken some reform measures, including passing a law named for Taylor that bans the use of the no-knock warrants. Police typically use them in drug cases over concern that evidence could be destroyed if they announce their arrival.
Fischer fired former police chief Steve Conrad in June and last week named Yvette Gentry, a former deputy chief, as the new interim police chief. Gentry would be the first Black woman to lead the force of about 1,200 sworn officers. The department has also fired Brett Hankison, one of the three officers who fired shots at Taylor's apartment that night. Hankison is appealing the dismissal.
The largest settlement previously paid in a Louisville police misconduct case was $8.5 million in 2012, to a man who spent nine years in prison for a crime he did not commit, according to news reports.