The actress has reached a confidential agreement with Alex Welch after allegedly giving her a black eye on a private jet back in October, TMZ.com reports.
According to TMZ, 21-year-old Welch will receive an undisclosed sum of money.
Welch's high-profile attorney Donald Karpel told the celebrity gossip website: “The parties are satisfied and the dispute has been resolved amicably and completely.'
Eighteen-year-old Demi, who is currently undergoing a stint in rehab for psychological and emotional issues, allegedly lashed out at Welch with such force the dancer suffered bruising on her left eye and cheek.
Lovato checked into a treatment centre soon after the incident and claimed she felt 'awful' about her behaviour.
In a previous interview with RadarOnline.com before the settlement was reached, Karpel added: “Alex is seeking a settlement, an apology from Demi and a donation made to a charity of her choice.”