The settlement came alongside an apology issued by the NME to the singer earlier today.
The following statement has since been given to Music Week by an NME spokesperson:
"NME is pleased that it has buried the hatchet with Morrissey in respect of the libel case he brought against us in 2007."
"Morrissey sued over an article based on interviews with him which he believed accused him of racism.
"After an on-going dialogue with Morrissey and his representatives, NME today publishes a clarification in the magazine and online which makes it clear that we do not believe we ever called Morrissey a racist and nor do we believe he is.
"We have said sorry to Morrissey for any misunderstanding that may have arisen.
"The settlement with Morrissey does not involve payment of any damages or legal costs (other than a small sum of costs which the court ordered NME to pay last year when we applied unsuccessfully to have the case struck out on grounds of delay)."