Sheen was in dispute with Warner Bros over money allegedly owed to him for work he had already done and also for future payments from syndicated episodes of the hit TV show.
The Wall Street star will be paid $25m for work he has already carried out and could earn an estimated $100m from the next seven years of the show's syndication, according to entertainment website TMZ.com.
Sheen and Warner Bros have also agreed to dismiss their respective lawsuits against each other.
'Warner Bros Television, Chuck Lorre, and Charlie Sheen have resolved their dispute to the parties’ mutual satisfaction,' Warner Bros said in a statement earlier today.