The 78-year-old singer had made an application to take charge of her offspring's affairs nine months ago, citing alleged substance abuse problems, but the pair have now made a private agreement and want to work on "rebuilding their family bond".
"The team successfully defended Elijah, resulting in Cher voluntarily dismissing her petition," a statement from Elijah's lawyers, Avi Levy and Steven Brumer, given to People magazine read.
"This outcome allows the parties to focus on healing and rebuilding their family bond, a process that began during mediation and continues today."
Neither the Believe singer nor her 48-year-old son were present for a court hearing on Friday but Cher's lawyer, Gabrielle Vidal, said they had "privately resolved that matter" and the singer wanted to dismiss her petition without prejudice, meaning she could potentially file again if necessary.
Cher previously claimed a conservatorship was "urgently needed" because she "feared that her son would not be alive within the year".
The Mermaids star's lawyers cited his treatment for schizoaffective disorder and revealed that in the past year, he had been placed in several 5150s - a California legal code that allows a person with a mental illness to be involuntarily detained for a 72-hour psychiatric assessment in hospital.
A judge ruled against the proposal as Elijah proved he had "managed his finances", had an apartment and "remained drug-free" after submitting "several drug tests" during the proceedings.
The judge also ruled there was not "sufficient evidence" to agree to the temporary conservatorship, as much of what the mother and son were arguing was based on "fears" and hypotheticals.
The pair attended a private mediation session in May, during which they agreed to "pause all legal proceedings and related activities, including all discovery and motion practice, to allow the parties to continue working together to privately and confidentially resolve this matter".