The owners of a Long Island pet store accused of knowingly selling hundreds of sick and injured puppies, including some that died days after being bought, will pay $300,000 to about 200 customers under a settlement announced by New York’s attorney general on Friday.

The settlement resolves a lawsuit filed by the attorney general, Letitia James, in December 2021 after an investigation by her office determined that the store, Shake A Paw, was acquiring and selling puppies from so-called puppy mills, large-scale commercial breeders with reputations for abuse, inbreeding and filthy conditions.

Ms. James’s inquiry also found that the store and its owners, Marc Jacobs and Gerard O’Sullivan, had failed to disclose animals’ serious medical conditions and had illegally refused to reimburse customers for veterinary bills incurred after they had been sold sick pets, according to court documents.

In addition to repaying the $300,000, Mr. Jacobs and Mr. O’Sullivan agreed to stop misleading advertising including claims that puppies sold by Shake A Paw were the “healthiest” and from the “most trusted breeders”; to buy animals only from reputable breeders; and to provide customers with disclosures certifying the health of their puppies, according to court documents.

All pet stores in New York will be prohibited from selling dogs, cats and rabbits starting in December under a law passed in 2022.

Richard Hamburger, a lawyer for Shake A Paw, declined to comment late Friday.

Erin Laxton, who bought her Chihuahua-dachshund mix, Merlin, at Shake A Paw in 2020, described the settlement as a “huge relief.” Ms. Laxton said Merlin had begun coughing the day she brought him home from Shake A Paw and had died of respiratory illnesses five weeks later, according to court documents.

“I feel like I was able to get justice for my poor puppy,” Ms. Laxton said in a statement, adding, “I miss my puppy every day, but I am proud to have been part of this process.”

Shake A Paw has locations in Hicksville and Lynbrook, both of which opened in 1994, according to court documents. Customers paid $2,500 to $8,000 on average for a puppy, along with what the attorney general’s office said were hundreds of dollars of unnecessary additional goods and services.

Ms. James said in the lawsuit that from 2016 to 2021, her office had received 99 complaints from Shake A Paw customers who said they had been sold puppies with serious physical injuries, congenital and hereditary disorders or infectious diseases. Similar complaints were made with the New York Better Business Bureau, according to Ms. James’s office.

One customer’s puppy died six days after a Shake A Paw employee said the pet was “fine,” according to court documents; another was hospitalized for severe double pneumonia just two days after it had been bought. Some customers said they had spent thousands of dollars on veterinary bills in the days and weeks after buying puppies from Shake A Paw, court documents show.

An analysis by the attorney general’s office of over 400 veterinary records of puppies sold by Shake A Paw found that more than half had upper respiratory infections or other breathing problems — both, in some cases — or were infected with parasites.

Shake A Paw also refused to reimburse customers for veterinary care they sought for pets that were already sick when they were sold, Ms. James said in a news release.

Shake A Paw also lied about where it had obtained the puppies it sold. The store claimed on its website that it worked with “the most trusted breeders” and handpicked “the best of the bunch,” but financial records showed that thousands of puppies from known puppy mills had been shipped to Shake A Paw’s owners.

Meaghan Huber bought a three-pound Shih Tzu that she named Mei Mei at Shake A Paw in 2014. She said in an interview on Friday that she was glad the store and its owners were finally being held accountable for the pain they had caused her and others.

Ms. Huber said Mei Mei had begun to have trouble breathing just days after she brought her home. For two years, Mei Mei was in and out of veterinary hospitals being treated for various illnesses and birth defects. She died in Ms. Huber’s arms just before her second birthday.

“It was so horrendous,” Ms. Huber, 35, said of trying to get Shake A Paw to compensate her for selling her a sick puppy.

“Dogs are our children,” she said. “We want the best for them. We did the best for Mei Mei that we could. We loved her with all of our hearts.”