At a Federal Court mediation on Thursday, Molan and the Daily Mail mutually agreed to discontinue the proceedings with each side paying their own legal costs.
"Daily Mail Australia alleged that Ms Molan had engaged in racist behaviour, with Ms Molan having denied that she had engaged in any such conduct," the publisher said in a statement.
"Both parties are happy with the resolution of the proceedings, which involved each party paying their own costs, but did not involve Daily Mail Australia paying any damages to Ms Molan."
Molan first sued the Daily Mail over a June 2020 article and two related Tweets which she claimed defamed her by portraying her as racist for saying "hooka looka mooka hooka fooka" on 2GB in May 2020.
In August 2022, the Federal Court ordered the Daily Mail to pay $150,000 for the article, with Justice Robert Bromwich saying the publisher had showed a lack of responsibility and basic professionalism.
However, these findings were overturned on a successful appeal. In March this year, both parties agreed that Justice Bromwich had not seen all of the required evidence.
The Full Court sent the matter back to be re-heard before the judge.
However, the settlement means this hearing will no longer take place.
AAP has contacted Molan for comment.
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