Lawyers acting for the troubled star - who is currently in rehab receiving treatment for "emotional and physical issues" - held a series of discussions with Alex Welch`s attorneys and have now reached a satisfactory conclusion.
Alex`s lawyer Donald Karpel said: "The parties are satisfied and the dispute has been resolved amicably and completely."
He added the issue has "been resolved amicably and completely," although he refused to reveal the amount of the settlement.
Alex, 21, had been planning to give an interview about the incident, which left her with a black eye, but was asked by Demi`s representatives to hold off until the case was negotiated.
Recalling the alleged attack, Alex recently revealed it happened after Demi had been reprimanded about her behaviour while on The Jonas Brothers tour and, believing one of the dancers had complained about her, the teenage singer-and-actress took them into a room and threatened them, saying: "If I find out who told on me ..."
However, Alex insisted she had no idea what the 18-year-old star was referring to and was stunned when the `Sonny With a Chance` star approached her on a plane the following day and punched her.
Demi left the tour immediately after the incident and checked into a treatment facility.