A spokesman for Martin Tankleff said Tuesday the Long Island man settled the suit for nearly $3.4 million.
Tankleff was convicted in the 1988 killings of his parents in their eastern Long Island home.
He was freed in 2007 after an appeals court found key evidence in his trial was overlooked. Prosecutors ultimately decided against a new trial.
His attorneys have argued that his confession was coerced and that a family business associate was the real culprit.
A spokeswoman for the state attorney general confirmed the settlement, saying it resolves the case on behalf of the state.
A federal lawsuit against Suffolk County and a detective who has admitted he coerced a confession from Tankleff is pending.