Apple sued HTC in 2010, accusing the Taiwanese handset company of infringing on the iPhone maker's patented technology. It was Apple's first major legal salvo against a manufacturer that used Google's Android operating system.
Apple and HTC did not disclose specific terms of the deal. In a joint statement, Apple chief executive Tim Cook said he was glad to reach a settlement.
"We will continue to stay laser focused on product innovation," Cook said. HTC chief executive Peter Chou said his company was pleased to resolve the dispute so it could "focus on innovation instead of litigation."
Since Apple first sued HTC, its smartphone patent war has engulfed competitors like Samsung Electronics Co Ltd and Google's Motorola Mobility unit.
The iPhone maker won a $1.05 billion verdict against Samsung in August, while litigation against Motorola has failed to produce any decisive wins.
However, Apple had the most success against HTC when it came to using litigation to actually disrupt the flow of products into the crucial U.S. market.
Late last year, the U.S. International Trade Commission ruled that HTC had infringed upon one of four patents Apple had disputed and imposed a sales ban on some of the Taiwanese maker's phones.
Though HTC said it had devised a technical workaround to Apple's patents, the company announced in May that shipments of its phones were being held up by U.S. customs officials.
Once one of the industry's high flyers, HTC has been badly hit by competition from Apple and Samsung. Last month HTC forecast a 14.5 percent fall in revenue in the fourth quarter from the third, worse than analyst forecasts and the second straight quarterly decline this year.
(Reporting By Dan Levine; Editing by Peter Cooney and Todd Eastham)
By Dan Levine