Valve was granted permission to use the term commercially, while the World of Warcraft studio's 'DOTA' will become 'Blizzard All-Stars'.
The steam platform holder is working on the real-time action strategy game DOTA 2, a standalone sequel to the 'Defence of the Ancients' mod for Blizzard's Warcraft III, putting the two firms on a collision course.
Blizzard brought the case to the US Patent and Trademark Office's Trial and Appeal Board, whose ruling was satisfactory to both parties.
"Both Blizzard and Valve recognise that, at the end of the day, players just want to be able to play the games they're looking forward to, so we're happy to come to an agreement that helps both of us stay focused on that," said Blizzard's executive vice president of game design Rob Pardo.
"As part of this agreement, we're going to be changing the name of Blizzard 'DOTA' to 'Blizzard All-Stars', which ultimately better reflects the design of our game. We look forward to going into more detail on that at a later date."
Valve president and co-founder Gabe Newell added: "We're pleased that we could come to an agreement with Blizzard without drawing things out in a way that would benefit no-one. We both want to focus on the things our fans care about, creating and shipping great games for our communities."
Under the terms of the agreement, Blizzard maintains the rights to the non-commercial use of 'DOTA' for user generated mods for World of Warcraft and StarCraft II.
Watch a trailer for DOTA 2 below: