TP-Link admitted it had broken US radio frequency rules by selling routers that could work at power levels higher than the approved limits.
The company paid a fine of US$200,000 and agreed to abide by the rules from now on.
Allowing the installation of open-source firmware was part of TP-Link's settlement with the FCC.
Devices such as routers are certified by the FCC's office of engineering and technology for use on unlicensed wireless spectrum within certain output levels so as to prevent interference with other lawful wireless communications, including those on adjacent spectrum bands.
"The Commission's equipment rules strike a careful balance of spurring innovation while protecting against harmful interference," said Travis LeBlanc, chief of the Enforcement Bureau, in a media release.
"While manufacturers of Wi-Fi routers must ensure reasonable safeguards to protect radio parameters, users are otherwise free to customise their routers and we support TP-Link's commitment to work with the open-source community and Wi-Fi chipset manufacturers to enable third-party firmware on TP-Link routers."