Chelsea and former manager Jose Mourinho have reached an undisclosed settlement with former team doctor at an employment tribunal in London, the Premier League club said on Tuesday.
Carneiro had claimed constructive dismissal by Chelsea and sexual discrimination by Mourinho who appeared at the tribunal and sat in the front row.
Terms of the settlement remained confidential. The doctor had rejected an earlier offer of 1.2 million pounds ($1.75 million).
In a statement Chelsea said they “regretted the circumstances” that led to Carneiro taking legal action and issued an unreserved apology.
Carneiro worked for Chelsea for six years until she left in September after clashing with Mourinho in the closing minutes of their opening league match of the season against Swansea City at Stamford Bridge in August.
The 42-year-old ran on to the pitch with physio Jon Fearn after being called on by referee Michael Oliver to treat forward Eden Hazard.
After the game an angry Mourinho, who is now manager of Manchester United, described the pair as “impulsive and naive” because it meant Chelsea being reduced to nine men near the end of the game after goalkeeper Thibaut Courtois had earlier been sent off.
Carneiro, who said she was subjected to sexist comments from colleagues, was relieved of her match-day duties soon after.
Chelsea said she had acted properly.
“We wish to place on record that in running on to the pitch Dr Carneiro was following both the rules of the game and fulfilling her responsibility to the players as a doctor, putting their safety first,” the club added.
“Dr Carneiro has always put the interests of the club’s players first. Dr Carneiro is a highly competent and professional sports doctor.
“She was a valued member of the club’s medical team and we wish her every success in her future career,” said Chelsea.
Following the incident against Swansea, the Football Association conducted an investigation after a member of the public complained about Mourinho’s language towards Carneiro.
The FA cleared Mourinho of making discriminatory comments.
The Portuguese, who won the league three times in two spells as Chelsea manager, was fired in December after a poor start to the season.
Carneiro issued a statement saying she was relieved the long-running saga had come to an end.
“It has been an extremely difficult and distressing time for me and my family and I now look forward to moving forward with my life,” she said.
“My priority has always been the health and safety of the players and fulfilling my duty of care as a doctor. In running on to the pitch to treat a player, who requested medical attention, I was following the rules of the game and fulfilling my medical responsibilities.
“I would like to thank everyone who has supported me including my husband, family and friends and members of the football community,” added Carneiro.
A spokesman for Women in Football, a network of professional women working in and around the industry, said the organisation was delighted the doctor had “been rightly cleared and her professional reputation as a doctor upheld”.
“We completely deplore and condemn her treatment by the club since (the incident) and welcome their unreserved apology,” the spokesman added in a statement.