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The settlement requires a public apology from the Sacklers.
Connecticut Attorney General Tong called it a "seismic victory for justice."
Two museum spaces will retain the Sackler name.
“The Sacklers are not bankrupt,” Tong said.
Connecticut Attorney General William Tong said he would appeal the settlement.
"This plan is a far cry from justice," said Tong.
The proposed agreement also calls for members of the Sackler family to give up ownership of Purdue, according to reports.
The Guggenheim's announcement follows action by three London art institutions that rejected Sackler donations.