The High Court in Dublin was told that the row had been resolved following last-ditch negotiations between the star’s lawyers and advisers and Conor Ridge, of Horizon Sports Management.
McIlroy was not in court for the brief hearing.
The terms of the settlement were not detailed in court, but according to reports, the settlement was “far north” of 20 million US dollars.
McIlroy, fresh from a weekend victory in Dubai, had sued Mr Ridge’s agency over the cut his firm was taking from on and off-course earnings in a potentially ugly row over ??4.2 million in fees.
Mr Ridge, who was flanked by supporters in the public gallery, hugged and kissed them after the announcement was made.
A brief statement agreed between the McIlroy and Ridge camps was released following the hearing.
“The legal dispute between Rory McIlroy and Horizon Sports Management has been settled to the satisfaction of both parties, who wish each other well for the future,” it said.
“The parties will be making no further comment.”
The two sides had been locked in talks for about 10 hours yesterday at the Four Courts complex in central Dublin, with McIlroy leaving last night at about 9pm without making any comment.
When the case was called this morning, Paul Gallagher, senior counsel for McIlroy, told the court: “The entire matter has been resolved.”