Teddy Riley, a Grammy Award winner, filed the breach-of-contract accusation in Los Angeles Superior Court, alleging he was promised a 25-percent writing fee after producing the song "Teeth" back in 2009. He asked for 500,000 U.S. dollars in compensation and punitive damages.
The 27-year-old superstar, whose real name is Stephani Germanotta, was sued along with her company, Team Love Child LLC, and Interscope Records.
Rileys attorney, Joseph Porter, told local media that "both sides are pleased with the settlement," but did not reveal the terms of the deal.
"Teeth" was part of Lady Gagas 2009 album "The Fame Monster".