The plan will see $21m provided to 355 people who filed complaints, as well as the establishment of a $500,000 fund for counselling.
It comes after years of negotiations.
Milwaukee has been one of the most implicated diocese in the molestation scandal, which began to engulf the Catholic Church in the United States more than ten years ago.
It later emerged that the abuse of victims, often young boys, by priests was often covered up by some at the very top of the church.
This was done by moving the priests to different parishes and assigning them on sick leave without explanation.
Struggling to pay the subsequent legal costs, the Church was forced to sell off assets such as schools. Some churches were closed and other parishes merged.
The bankruptcy package promises $2,000 each to another 104 people who claim to be victims.
Milwaukee Archbishop Jerome Listecki said: "No amount of money can ever restore what was taken from abuse survivors.
"In some way, we hope that we are turning a corner on a terrible part of our history and embarking on a new road lined with hope, forgiveness and love. This era of our past will live on, but we also look forward to the future as a better church. And we are a better church because of the courage of those who have come forward."