Ursula Auburn sued Sheen in April 2006, claiming the "wacky neighbor and female stalker Rose" on the show was based on her. The way Rose talks, dresses and looks all resemble Auburn, the lawsuit claimed. Sheen never sought Auburn's permission, according to the suit.
The suit was settled March 14, according to Superior Court documents, which do not disclose more details.
Calls on Saturday night to Sheen's attorney, Bruce Isaacs, and Auburn's attorney, Edward Kang, were not immediately returned.
The lawsuit claimed there were numerous situations on the show involving Rose and Sheen's character, Charlie Harper, that resembled experiences Auburn had with the actor.
That included an episode where Rose creates a Web site detailing Harper's womanizing ways, according to the lawsuit. In real life, Auburn created a web site detailing her relationship with Sheen.