The plaintiff's lawyer, Tony Buzbee, said in a text message to The Associated Press on Monday night that his client's claim against Watson has been settled confidentially.
Buzbee had threatened to have his client speak to the NFL, which had opened an investigation against Watson. It's not yet known if Watson will face any further discipline from the league.
A league spokesman declined comment in an email to AP.
The QB was suspended for the first 11 games in 2022 for violating the league's personal conduct policy after more than two dozen women accused him of sexual assault and inappropriate conduct during massage therapy sessions.
Watson was also fined $5 million and had to undergo mandatory evaluation before he was reinstated by the league.
The new lawsuit was filed on Sept. 9 in Harris County, Texas. The unidentified woman alleged Watson had sexually assaulted her in 2020 while on a dinner date in her apartment. She was seeking damages in excess of $1 million.
Watson, who in his third season with Cleveland after being acquired in a controversial trade from Houston, had strongly denied the allegations.
The 29-year-old has previously settled nearly two dozen civil lawsuits.
Watson's career with Cleveland has not gone like he or the team had hoped after the Browns signed him to a $230 million contract. He made just six starts last season before fracturing a bone in his right shoulder during a game and undergoing surgery.
He's struggled in the Browns' new offense this season to the point that coach Kevin Stefanski was asked after a loss on Sunday against Washington if he will bench Watson, who has yet to throw for 200 yards in a game this season.