Bad Boy Records was one of the biggest rap labels of the 1990s, home to artists like Ma$e, Faith Evans, 112, The Lox and Notorious B.I.G.
Those acts have now been given back control of their songwriting rights.
A source with knowledge of the deal said Combs had previously been offered millions of dollars to sell the rights.
The value of music publishing rights has increased dramatically in recent years, with artists like Bob Dylan, Neil Young, Debbie Harry, Bruce Springsteen, Stevie Nicks and Shakira foregoing future royalties in exchange for nine-figure sums.
Combs declined those offers in favour of "giving back to the people who helped build his company", the BBC has been told. Billboard and Rolling Stone have also reported the deal.
The star, who scored his own hits with tracks like I'll Be Missing You, Can't Nobody Hold Me Down and Bad Boy For Life, made the move on the 30th anniversary of his label.
However, the process of reaching out to the artists and writers began in May 2021. While most of the parties have agreed to the deal and signed contracts, others are still to be tracked down. Established in 1993 as a joint venture between Combs and Arista Records, Bad Boy was responsible for iconic hip-tracks including Juice and Mo' Money, Mo' Problems, both by Notorious B.I.G.; Flava In Ya Ear by Craig Mack; and Feel So Good by Ma$e.
At the time, it was not uncommon for labels to secure a percentage of an artist's publishing rights when they signed deals - but the practice has been a bone of contention for many.
When Combs used a speech at a 2020 Pre-Grammy Gala to say that hip-hop and black music had "never been respected by the Grammys", Ma$e took his former label boss to task, saying he was equally guilty.
In a since-deleted Instagram post, the rapper said he had offered Combs $2m (£1.59m) to buy back his publishing rights but the offer was turned down.
"Your past business practices knowingly has continued purposely starved your artist," he alleged in the post. "For example, u still got my publishing from 24 years ago in which u gave me $20k. Which makes me never want to work [with you], as any artist wouldn't… This is not Black excellence at all."
Combs later claimed Ma$e actually owned him $3m (£2.4m) for an album he had failed to deliver, an allegation that the rapper vigorously denied.
However, it was Ma$e's longtime friend and collaborator, Cam'ron, who first leaked the news of Combs' decision to return publishing rights to his artists.
In an Instagram post about his forthcoming mixtape The Lost Files, he explained that Ma$e had had to "sit this one out" because he'd been hammering out the deal.
"He just got his publishing back from Puff. Just finished the paper work for that yesterday. Congrats @rsvpmase."
Combs reportedly sees the move as "part of a larger conversation" about furthering "the economic empowerment of black artists and culture" in the hope that other labels will follow suit.
The rapper, producer and music mogul also has new music on the horizon. The L.O.V.E. Album: Off the Grid is due out next week, with guest appearances from Justin Bieber, Burna Boy, The Weeknd, Mary J Blige, Busta Rhymes, Tayana Taylor and H.E.R.
Combs will also receive the Global Icon Award at next week's MTV Awards in New Jersey, where he is due to perform live.
Recent Bad Boy Records releases have included Machine Gun Kelly's Mainstream Sellout and Janelle Monae's The Age of Pleasure.
