The money will be distributed to the families of 10 Turkish activists who were killed by Israeli commandos who had boarded the vessel carrying humanitarian aid bound for Gaza in May 2010.
Israel on Friday paid Turkey $20 million in compensation over the 2010 Mavi Marmara tragedy involving a Gaza-bound aid flotilla, Turkish diplomatic sources said.
On August 20, Turkey's parliament approved a deal which involved Tel Aviv paying $20 million to the families of the victims as part of a normalisation agreement between Turkey and Israel after a six-year hiatus in ties.
Diplomatic ties between Turkey and Israel were disrupted in May 2010 when Israeli commandos killed 10 Turkish activists on the Mavi Marmara, which was headed for Gaza to deliver humanitarian aid.
The compensation to the victims' families was one of the three key demands by Turkey for reconciliation relations with Israel.
In the aftermath of the attack, Turkey also demanded an official apology from Israel and the lifting of Israel's Gaza blockade.
In 2013, Israeli Prime Minister Benjamin Netanyahu voiced regret over the incident to Turkey's then-prime minister and now President, Recep Tayyip Erdoğan.
In addition to the compensation, Israel also agreed to Turkey's humanitarian presence in the occupied Gaza Strip.
Turkey sent a second aid shipment to besieged Gaza in early September, two months after the first shipment,