0111 GMT February 18, 2020
Glasgow is believed to be the first institution in the UK to implement such a scheme, BBC reported.
The money will be raised and spent over the next 20 years on setting up and running the Glasgow-Caribbean Centre for Development Research.
It will be managed in partnership with the University of the West Indies.
The center, to be co-located in Glasgow and the Caribbean, will sponsor research work and raise awareness of the history of slavery and its impact around the world.
Professor Sir Hilary Beckles, vice chancellor of the University of the West Indies, said the university's decision to make reparations was a "bold, moral, historic step" in recognizing the slavery aspect of its past.
The move comes almost a year after a study by the university looked at thousands of donations it received in the 18th and 19th centuries.
It found many were from people whose wealth came from slavery.
University bosses said that although it never owned enslaved people or traded in the goods they produced, it was clear it had received significant financial support.
In total, the money it received is estimated as having a present day value of between £16.7 million and £198 million.
Donations to the 1866-1880 campaign to build the university's current campus at Gilmorehill found 23 people who gave money had some financial links to the New World slave trade.
Dr. Stephen Mullen, coauthor of the report, ‘Slavery, Abolition and the University of Glasgow’, said the university benefited greatly from gifts and bequests from people associated with slave economies in Jamaica and the Caribbean.
He said reaction to the report had been positive.
"I don't think I was expecting the global reaction but I knew it was an important, landmark piece of work," he said.
Since the report into Glasgow's past, other universities have begun to investigate whether they benefited from the slave trade.
Cambridge University has started its own investigation and will consider how it might make reparation for any links to the legacy of the slave trade.
The University of East London's chair of governors, Geoff Thompson, thinks reparations should take the form of a £100 million fund for BAME (Black, Asian and Minority Ethnic) students.
Speaking last year, he said, "It is about how seriously we take the past to inform our future, and what we can do to help change lives."