Actress Ola Ray played the role of the late singer's love interest in the film. She sued Jackson's production company in May 2009 - the month before he died - claiming she hadn't been paid royalties for the short film which accompanied his track in 1983.
Ray - who is a former Playboy Playmate - filed the case stating a breach of contract, saying that she was still owed a large sum for her work on the successful clip.
Details of the settlement have not been made public.
The actress's legal representative previously said that Ray was not sure how much she is owed by Jackson's estate, but that her accountants were working the amount out.
'Thriller' director John Landis has also filed a similar lawsuit against Jackson's estate. However, TMZ reports that Landis and the estate are currently trying to work out an agreement.
'Thriller' was named the most influential video in pop music history by a MySpace poll two years ago, and topped a Billboard poll of favourite pop videos from the 1980s last August.
Watch the video to Michael Jackson's 'Thriller' below: