In a carefully-worded statement released on Monday, Menezes's family said "all litigation" between them and Scotland Yard has been resolved.
Members of the de Menezes family and activists in the Justice 4 Jean campaign declined to comment on the size of the settlement. But there was speculation it could be as little as 100,000 British pounds (US$ 166,000) , plus the substantial costs of the family's legal team.
It was claimed the payment may have been lower than expected because Menezes had no wife or children and came from a poor background.
The Brazilian man, 27, was mistaken for failed suicide bomber Hussain Osman by surveillance and armed officers and shot dead. The shooting took place two weeks after suicide bombers killed 52 people in four explosions on the London transport network.
The last moments of Menezes' life as he left his Tulse Hill apartment and traveled to the subway station have been examined in minute detail. The shooting provoked a series of wide-ranging inquiries that hauled police tactics, supervision and individual decisions over the coals.
The Metropolitan Police was convicted of health and safety failures at the Old Bailey and fined £ 175,000 (US$ 290,000) and ordered to pay £ 385,000 (US$ 638,000) costs.
In a joint statement released by the Met, the Menezes family said the agreement will allow them to "move forward with their lives."
Mercopress