The Stewart Milne Group has been in a long-running dispute with Aberdeen City Council over the sale of a plot of land at Westhill, on the outskirts of the city.
The building firm lost a legal battle with the local authority in 2011 after the Supreme Court ruled in favour of the city council.
However, the two parties failed to reach an agreement on the value of the settlement that the council was due over the sale.
The construction giant, owned by Aberdeen Football Club chairman Stewart Milne, believed it owed less than £500,000. The council was seeking double that figure, plus expenses and interest.
Yesterday it emerged the agreed sum of £1m, including interest, is to be paid to the council by January next year.
Stewart Milne Group's Finance Director John Irvine said: "We are pleased the matter has been resolved and look forward to continuing a positive working relationship with the council in the future."
The row erupted after the company paid £365,000 for council land at an industrial estate in Westhill on the outskirts of Aberdeen.
The 11-hectare plot at Westhill Business Park is home to many of the major oil companies in Aberdeen. A condition was attached to the deal stating that the local authority would receive a share of any profit made by the sale of lease of the plot.
Stewart Milne Group (SMG) then sold the land to a linked company, Stewart Milne Westhill, for £483,020.
However, the firm said the council could make not make any financial claim on the deal because the sale cost SMG £559,696.
However, the council claimed the Westhill Business Park ground was actually worth £5.6m - more than 11 times the price SMG received - and took its case to the Court of Session.
Aberdeen City Council lawyers argued that the firm had sold the site to an associated company at an artificially low price and the land's market value should be taken into account.
The construction firm was ordered to pay the city council £1.7m as the percentage due during a court hearing in 2009.
SMG appealed to the Supreme Court in London on the grounds that calculations should be made on the price it received instead.
But judges at the highest court in the land in December 2011 dismissed the appeal in a unanimous ruling.
Aberdeen City Council's Director of Enterprise, Planning and Infrastructure Gordon McIntosh said: "It makes sense for the council to accept an offer which we feel is fair and reasonable from the Stewart Milne Group, rather than continue with protracted court proceedings and associated risks."