The tennis star had previously been cleared over the death of 78-year-old Jerome Barson, who died after the car he was travelling in – driven by wife Linda – slammed into the passenger side of Williams’ SUV on 9 June last year.
Police said Williams, 38, had been cut off by an unknown third driver as she tried to cross a six-lane road near her Florida home, setting off a chain of events that led to the collision.
Lead investigator David Downling said that CCTV video showed Williams had legally enter the intersection from a road leading out of her gated neighbourhood.
As she started to cross, a dark-coloured car cut her off, forcing her to stop.
Once she was able to begin moving forward in her 2010 Toyota Sequoia, she ended up in the path of the Barsons, whose 2016 Hyundai Accent hit the SUV at 40mph.
Mr Dowling said the law required Williams to exit the intersection and that Mrs Barson, 68, was obligated to make sure the intersection was clear – even though she had a green light.
Mr Barson, 78, died 13 days after the crash and his wife suffered a broken arm and other injuries.
Williams – who has on-court career earnings of around $40m (£31m) – was unharmed.
Palm Beach County court records show that the lawsuit was settled on Friday, although terms of the agreement were not included in the documents.