Idol creator Simon Fuller sued Fox Broadcasting in July 2011 over claims that he was owed an executive producer credit and fee over the Simon Cowell-fronted X Factor.
Papers have now been filed in the LA Superior Court to dismiss the claims with prejudice following the settlement, The Hollywood Reporter says.
Terms of the settlement are confidential and neither party has commented on the reports.
Fuller first brought a lawsuit in 2004 following the launch of The X Factor, citing its alleged similarities to his show Pop Idol.
A 2005 out-of-court settlement kept Cowell as a judge on US spinoff American Idol for five more years and made Fuller a partner in The X Factor.
However, Fuller launched his second suit asking for the credit and fee in July 2011, arguing that Fox and Fremantle North America had refused to honour the previous agreement.
That suit, which is now settled, claimed that Fox and Fremantle North America had "made hundreds of millions of dollars thanks to the creative efforts of Fuller".