Suge was facing life in prison for killing Carter in 2015 in the parking lot of Tam's Burgers in Compton.
Knight, wearing an orange jail jumpsuit, entered the plea at Los Angeles Superior Court ahead of his scheduled murder trial.
The rap mogul, whose label once listed Dr Dre, Tupac Shakur and Snoop Dogg, pleaded no contest to voluntary manslaughter in exchange for the prison term.
Knight, 53, had faced a murder charge and has been in jail since turning himself in shortly after the January 29, 2015, collision in which his red Ford Raptor pickup plowed into Terry Carter, 55, and 51-year-old Cle "Bone" Sloan, a technical adviser on the movie, who survived. Terry Carter, 55, was killed and the other man was injured.
Knight fled the scene, but the incident was captured on surveillance video.More news: Doctor, girlfriend accused of drugging, raping women
Knight disagreed with the judge's description of one of his previous strikes and put a pause in the proceedings that briefly raised tension in the courtroom.
But at one point when asked by the judge if he understood his plea could lead to deportation were he not a USA citizen, Knight joked: "Is ICE (Immigration and Customs Enforcement) gonna come and get me?"
Knight was sent to prison in October 1996 for violating probation on a previous assault case when he allegedly kicked a man during a scuffle at a Las Vegas hotel. Knight, who was at the wheel, was slightly wounded himself. The 53-year-old will get credit for time served - he's been in jail awaiting trial for around 3 1/2 years. Both rap murders remain unsolved.