The 95-year-old comic book writer had filed the lawsuit in May and claimed that the company, which he co-founded, had conspired with two of its officers, CEO Shane Duffy and co-founder Gill Champion, to steal his identity.
In a statement, obtained by The Hollywood Reporter, Lee revealed that he is terminating the lawsuit and looks forward to work with company once again.
"The whole thing has been confusing to everyone, including myself and the fans, but I am now happy to be surrounded by those who want the best for me," Lee said.
"I am thrilled to put the lawsuit behind me, get back to business with my friends and colleagues at POW! and launch the next wave of amazing characters and stories!" he added.
In the suit, which was filed in Los Angeles Superior Court, Lee had also alleged that Duffy and Champion did not disclose the full terms of the company's sale to Hong Kong-based Camsing International in 2017.
Duffy said that he is happy that "ill-founded lawsuit" has been dismissed.
"We look forward to working with Stan again to develop and produce the great projects that were put on hold when the lawsuit was filed. We recently got together with Stan to discuss our path forward and we and (parent company) Camsing are pleased with his overwhelmingly enthusiastic reaction," he said.
According to the suit, Lee had also claimed that after his wife Joan Lee's death, he became "the target of various unscrupulous businessmen, and opportunists who saw a chance to take advantage of Lee's despondent state of mind, kind and devotion to his craft - a devotion that often allowed him to overlook the bad intentions in others when it came to his property".
The suit, filed through attorney Adam DH Grant, had sought to rescind the licence agreement as well as "damages in excess of one billion dollars".
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