The 31-year-old 'Borrowed' hitmaker accused Kimberly Smiley and her daughter Alexa of allegedly recording their telephone conversation in 2012 without the singer's permission.
Excerpts from the conversation were later leaked to the public, reported Radar online.
A lawyer for the defendants said that both sides had resolved their differences and reached a settlement, and would not be commenting further.
A jury trial that was scheduled to take place on June 2, 2014 has now been cancelled.
Smiley previously asked a judge to dismiss the lawsuit in September, two months after LeAnn's team said she was 'too busy' to give a deposition for the lawsuit.
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