"There's a confidential settlement," said Art Morgan, the family's attorney. "We can't say the amount."
A Knott's spokesperson declined to comment on the settlement.
Kyle Wheeler was sitting in the front row of Xcelerator when the roller coaster's launch cable snapped, whipped toward the riders and split the fiberglass car in half.
The severed cable lashed Kyle's left calf and sprayed debris in the face of his father, Russell, who was sitting next to his son as Xcelerator raced toward the coaster's trademark top hat element.
Every moment of the harrowing September 2009 accident -- from the initial thrill to the ensuing terror -- was captured by on-board ride video that has since been viewed more than 700,000 times on YouTube.
Anita Wheeler watched helplessly from the ground as the 80-mph episode unfolded before her eyes.
"I literally thought I had just watched my son and husband die in front of my eyes," the Weaverville, Calif., mother wrote in an online chat room shortly after the accident.
Over the ensuing months, Kyle underwent multiple surgeries to repair muscle damage to his leg and graft skin over his injuries. The operations were followed by physical therapy to restore function to his left knee and ankle.
"Our lives have been changed forever," Anita Wheeler told the Trinity Journal, a Northern California newspaper. "We're just traumatized."
Moving from a wheelchair to crutches and then a knee brace, Kyle is now able to walk on his own again, his mother said.
"This whole experience has been terribly hard on my whole family," Anita Wheeler wrote online. "I am overwhelmed with emotion most days."
And while Kyle has fully recovered from the accident, according to Morgan, the family's lawyer, the boy will need a $30,000 surgery later in life to remove scar tissue. The family has racked up more than $60,000 in medical bills so far, according to Morgan.
An investigation by the California Division of Occupational Safety and Health found that the Xcelerator accident could have been prevented with proper maintenance, casting blame on both the theme park and the ride manufacturer, Switzerland-based Intamin.
The report said the snapped cable exhibited "gross amounts of fatigue" and found the force of the accident sheared off 18 of the 20 magnets on the bottom of the coaster cars used for launching and braking.
The state's Xcelerator investigation also looked at a similar accident involving an Intamin coaster that occurred in 2004 at Knott's sister park, Cedar Point in Ohio, when metal debris from a launch cable struck four riders on the 420-foot-tall Top Thrill Dragster.
Knott's reopened Xcelerator more than a year ago after making modifications required by the state report, theme park officials said.
"Safety is always our No. 1 concern," said Knott's spokeswoman Jennifer Blazey. "Our maintenance and ride operations crews work diligently to insure rider safety."
A spokesman for ride manufacturer Intamin declined to comment.
The settlement covers Kyle's medical bills as well as the family's emotional distress, Morgan said.
Meanwhile, Anita Wheeler remains too emotionally distraught to discuss the accident.
"I can't talk about it without crying," she said by phone from her home. "It was horrible."