The settlement was announced in State Supreme Court by Judge Douglas E. McKeon, with both sides agreeing to keep the settlement confidential, The New York Times reported.
Strauss-Kahn, 63, head of the International Monetary Fund at the time and a suggested candidate for the French presidency, was arrested in May 2011 after Nafissatou Diallo, a hotel housekeeper, told New York police detectives he had sexually assaulted her in his hotel suite. Strauss-Kahn was indicted on charges including attempted rape, sexual abuse, criminal sexual act, unlawful imprisonment and forcible touching. The charges eventually were dropped.
He resigned his IMF position after the alleged incident.
Strauss-Kahn was not in the Bronx courtroom for the announcement. His lawyers last month denied a French newspaper report saying he would pay $6 million to Diallo, the New York Daily News reported.
After the hearing, which Diallo, age 33 and an immigrant from Guinea, attended, she said, "I thank everyone who supported me all over the world. Thank God, bless you all."
Diallo attorney Kenneth Thompson said his client "is a strong and courageous woman who has never lost faith in our system of justice. With this resolution behind her she can now move on with her life."
2014: The Year in Fashion [PHOTOS]