The pair said they reached an agreement on Friday, without disclosing details.
In a joint statement, Diddy and Cassie said that she “decided to resolve this matter amicably on terms that I have some level of control.
“I want to thank my family, fans and lawyers for their unwavering support.
Diddy wrote: “We have decided to resolve this matter amicably. I wish Cassie and her family all the best. Love.”
Cassie filed the lawsuit on Thursday, in which she said she was trapped for a decade by Diddy, her ex-boyfriend, in a cycle of abuse and violence.
The rapper and record executive – who also goes by the stage name Puff Daddy – denied the allegations, and accused the singer of trying to extort him.
His lawyer said the claims were “offensive and outrageous”.
Confirming the settlement, Cassie’s lawyer Douglas Wigdor said: “I am very proud of Ms Ventura for having the strength to go public with her lawsuit. She ought to be commended for doing so.”
Cassie alleged that the rap producer raped and beat her over 10 years starting when she was 19 and he was 37.
“After years in silence and darkness, I am finally ready to tell my story,” she said in a statement on Thursday.
The lawsuit included multiple graphic descriptions of the violent abuse that she says began after she met the rapper in 2005.
According to the complaint, Diddy signed her to his record label, Bad Boy, and “plied the vulnerable Ms Ventura with drugs and alcohol, causing her to fall into dangerous addictions that controlled her life”.
His lawyer said the claims were “offensive and outrageous”
The lawsuit labelled the musician a “serial domestic abuser, who would regularly beat and kick Ms Ventura, leaving black eyes, bruises, and blood”.
In a statement, Diddy’s lawyer said Ms Ventura had demanded $30m (£24m) “under the threat of writing a damaging book about their relationship”.
His lawyer, Benjamin Brafman, said the lawsuit was “riddled with baseless and outrageous lies” and the alleged demand “was unequivocally rejected as blatant blackmail”.
In response to Mr Brafman, Cassie’s lawyer, Doug Wigdor, said Mr Combs had offered her a payment of “eight figures to silence her and prevent the filing of this lawsuit”.
“She rejected his efforts and decided to give a voice to all woman who suffer in silence,” he said.
Cassie released several hits in the 2000s, including songs that featured Diddy.
Her most famous tracks include Me & U, Long Way to Go and Official Girl, featuring Lil Wayne.
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