The announcement came just days before the company was to appear in court alongside health-care company Johnson and Johnson, the only remaining defendant, which will be heard by a district judge this week.
The Oklahoma state has also accused Johnson and Johnson of providing narcotic ingredients for much of the US' opioid supply.
"Nearly all Oklahomans have been negatively impacted by this deadly crisis and we look forward to Tuesday, where we will prove our case against Johnson and Johnson and its subsidiaries," Hunter said in a statement.
Teva Pharmaceuticals is the second company to have settled with Oklahoma in its efforts to combat the opioid crisis.
The settlement comes two months after Purdue Pharma, the maker of OxyContin, agreed to pay a USD 270 million in the historic lawsuit, and just days before the scheduled start of a trial.
Teva Pharmaceuticals, which primarily sells generic drugs, issued a statement saying the settlement does not establish any wrongdoing on the part of the company, and that Teva "has not contributed to the abuse of opioids in Oklahoma in any way."
Hunter told CNN that the terms of the settlement agreement may take up to two weeks to finalise. The money will be used to help establish a national addiction treatment and research centre at Oklahoma State University, he added.
Hunter further told CNN that the company will provide USD 20 million of addiction treatment and opioid rescue medications to the centre over the same five-year time frame, while a remaining USD12.5 million from the settlement will be used directly to help cities and counties with the opioid crisis.