Dykstra and DDK & Co. sealed the deal in Manhattan federal court on Monday. Terms of the deal were not revealed.
Dykstra had said in February he was looking forward to fighting the lawsuit because he wanted people to stop trying to rip off ballplayers. He also said at the time it was "insane" if DDK thought he would pay $111,000 for a tax return.
The company said in the lawsuit that the tab had grown to about $139,000.
Dykstra won a World Series with the New York Mets in 1986 and was a three-time All-Star in the 1990s while with the Phillies.