The deal, for less than half the $2 million the former MTV star is reported to have originally sought, will let Vivid Entertainment Group of Los Angeles release a video called "Farrah Superstar: Backdoor Teen Mom."
"I am happy with the seven-figure settlement I have reached with what I feel to be the best adult entertainment company in the industry, Vivid," Farrah told celebrity gossip magazine In Touch Weekly.
"I look forward to my future goals of completing my master's degree and focusing on being a great mother for my daughter, as well as many other culinary business endeavors in my future," she said.
The film, which she made with porn star James Deen, will be released on vivid.com May 6 and nationally in stores May 14, Vivid says.
The 21-year-old mother of 4-year-old Sophia Laurent Abraham originally denied having done a video and later claimed the 70-minute tape was intended for her personal use only. Deen eventually told the website of NBC-TV's "Today" program it was all planned out from the start.
Now that she cut the deal, Abraham told In Touch she was "very pleased with the outcome and to have this opportunity to be an entrepreneur in another unexpected light in my life."
Abraham acknowledged porn was not a typical accomplishment a young mother should boast about.
"This is a risk for me to take," she said. "However, I feel comfortable with giving the rights to Vivid, a company I know can handle the media and press surrounding my sexuality."
Vivid founder Steve Hirsch said "many fans will be shocked at how truly explicit" the video is.