Liza Rios sued the Lean Back star in 2014, claiming he agreed to split the profits from Big Pun's songs with her after her husband died in 2000, and revealing she hadn't been paid a cent since 2005.
She was reportedly demanding over $1 million (GBP670,000).
According to Bossip.com, the settlement, which was reached in Manhattan Federal Court on Wednesday (22Jun16), was confidential, but an expert reportedly testified Rios was owed $2 million (GBP1.3 million).
"We are pleased with the settlement," Rios' lawyer Lita Rosario told the publication. "We think it was fair, and we're pleased."