"It is the final episode in a long legal battle between this newspaper and the fallen icon..." the paper said.
The newspaper was forced to pay Armstrong £300,000 pounds in 2006 to settle a legal case after it had questioned his Tour de France victories in an article published two years earlier.
Armstrong also sought damages from Sunday Times chief sports writer David Walsh and deputy sports editor Alan English.
However, after the 41-year-old was stripped of his record seven Tour wins and handed a life ban last year for cheating his way to glory, the newspaper demanded a return of the payout plus interest, as well as more than £720,000 costs accrued in defending the case.
After years of denials, Armstrong confessed in an interview with Oprah Winfrey earlier this year that he used performance-enhancing drugs to cheat his way to the Tour de France wins.
The Sunday Times said it, in conjunction with Walsh and English, had "reached a mutually acceptable final resolution to all claims against Lance Armstrong related to the 2012 High Court proceedings and are entirely happy with the agreed settlement, the terms of which remain confidential."
Walsh was one of the first journalists to treat Armstrong's Tour de France feats with suspicion and he published an article questioning them as early as 1999.
However, Armstrong sued the paper in 2004 after it published an article, penned by English, which described allegations of doping contained in a book written by Walsh and French journalist Pierre Ballester.
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- Tour de France
- Lance Armstrong