The terms of the settlement were not revealed.
The "Mean Girls" and "Freaky Friday" star, who has battled addictions to drugs and alcohol for years, accused the company of violating her rights by using her first name in a TV commercial featuring a "milkaholic" baby named Lindsay, who tries to steal another toddler's beau.
"We're very glad that the case is settled," Lohan's lawyer, Stephanie Ovadia, told the New York Post.
"Basically, it was a business decision to move on," an E*Trade spokeswoman told the newspaper. "We are pleased to have the matter behind us."