However, the terms of settlement has not been revealed.
The socialite’s lawyers said that the both are glad that they have resolved the matter without taking much time.
"Both parties are glad that the matter could be resolved without the time and expense of a trial. The resolution is confidential, and no one will comment further,” E! Online quoted the lawyers, as saying.
In May this year, the case’s hearing was postponed to August 22 after Hilton said that she was distraught over her imminent jail sentence.
Graff brought a 10-million-dollar slander and libel lawsuit against Paris Hilton for having a false and damaging story published about her in the New York Post in July 2005.
According to reports, when Graff saw Hilton and Hilton's then fiancé Paris Latsis, who was hooked to Graff, at London's Kabaret nightclub, the socialite went "berserk" and tried to choke Hilton and steal her 4 million dollar diamond necklace.
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