The Ravens confirmed the agreement Friday.
"The Ravens agreed to resolve the grievance with Ray Rice," team president Dick Cass said in a statement. "It's time to turn the page, and we're moving forward.
"We will continue to focus on being the best partner we can be with our community, and that includes our work with the House of Ruth and One Love Foundation on the issue of intimate partner abuse.
"We wish Janay and Ray Rice the best."
Rice had been seeking from the team $3.5 million in back pay, which was the amount he would've made for the final 15 weeks after serving a two-game NFL suspension. He was released by the Ravens on Sept. 8, a few hours after the in-elevator video surfaced showing the three-time Pro Bowl player knocking out his then-fiancée, Janay.
Ravens officials wouldn't confirm a settlement. This move would end the litigation between the Ravens and Rice, who is the franchise's No. 2 all-time rusher.
In November, Rice successfully won his appeal to overturn an indefinite ban from the NFL. He wasn't signed by any team and remains a free agent.
Pro Football Talk reported on the settlement earlier Thursday. Sources later confirmed it to ESPN.