Morrison was at the centre of a media storm in 2009 when a statement was posted to the singer’s website announcing the birth of George Ivan Morrison III, or ‘Little Van’ as he became known.
John Saunders, regional president at FleishmanHillard, was brought in by Morrison to conduct a series of interviews on his behalf stressing that he did not know Little Van’s mother, Gigi Lee.
However, it later emerged that Lee had worked as a tour manager on some of the singer’s tours and Saunders initiated legal proceedings against Morrison in 2012.
PA reported that, at a brief session at Dublin’s High Court on Monday, lawyers confirmed a settlement had been reached between the two parties.
This included a letter to Saunders that he acted "with integrity and on the express instructions of the defendant Van Morrison", his lawyer told the court.
Undisclosed damages and legal costs have also been agreed, the High Court heard.
A solicitor for Saunders said afterwards that his client was "satisfied" that the record had now been set straight.