Jean Charles de Menezes was shot to death in a London underground station in the aftermath of the city's terrorist bombings in July 2005.
Lawyers for the de Menezes family have reached an out-of-court settlement, Web site politics.co.uk reported Monday.
No amount has been announced but the settlement is thought to be about a third of the 300,000 pounds ($500,000) the family was seeking, the Web site said.
In a joint statement, police and the family confirmed all litigation was resolved between both parties.
"The members of the family are pleased that a compensation package has been agreed which enables them to put these events behind them and move forward with their lives," the statement said.