The 22-year-old beauty queen sued the pageant's co-executive directors, Keith Lewis and former Miss USA Shanna Moakler, as well as pageant publicist Roger Neal, on allegations of libel, slander and religious discrimination in
Los Angeles Superior Court in August.
The pageant then countersued Prejean in October, asking to be reimbursed for her breast implants.
"Carrie Prejean, Keith Lewis and K2 Productions have dropped their claim against each other and wish each other the best in their future endeavors,'' a joint statement announcing the end of the litigation reads.
No details on the terms were divulged.