The judge overseeing the settlement with Oscar Walden Jr. ordered the terms to remain secret, the Chicago Tribune reported Tuesday. Walden asked for $15 million when he filed the lawsuit in 2004.
Flint Taylor, one of his lawyers, said he is "very satisfied."
"It was very difficult on him to after all these years to have to relive all of this," Taylor said. "He felt strongly he wanted vindication, and he wanted compensation."
Walden, who is black, was a 20-year-old student at Moody Bible Institute when he was convicted of raping a white woman. His supporters say a man who was arrested the next year and convicted of rapes in the same neighborhood also confessed to the 1951 rape, but Walden remained in prison until he was paroled in 1965.
Gov. George Ryan pardoned Walden in January 2003.
When Walden's lawsuit went to trial in federal court, a jury found for the city. But a judge overturned the verdict, finding the city's lawyers used tactics like giving the jury a vivid description of the 1951 rape.
"There must be a bright line between aggressive advocacy and 'win-at-all-costs' unethical conduct," the judge said. "That bright line has been crossed."