The 59-year-old muscleman has dropped his lawsuit against the radio shock jock, who had previously alleged that Hulk knew he was being videotaped having sex with Bubba's wife Heather Clem in the footage taken six years ago.
Hulk's publicist has said that the terms of the settlement are confidential.
Meanwhile, Bubba has issued a statement apologising for his accusations.
"After further investigation, I am now convinced that Hulk Hogan was unaware of the presence of the recording device in my bedroom," the statement read.
"I am convinced he had no knowledge that he was being taped. Additionally, I am certain that he had no role in the release of the video."
"It is my belief that (he) is not involved, and has not ever been involved, in trying to release the video, or exploit it, or otherwise gain from the video's release in any way."
The fight is not over yet for the former WWE champion.
Hulk still has a $100 million lawsuit against US website Gawker for publishing grainy footage from the sex tape online.
In pics: Celebrity sex tapes
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