Lawyers for Wepner and Stallone filed notice in U.S. District Court last week that they have settled the 2003 lawsuit for undisclosed terms.
Wepner had maintained that although he was the inspiration for Stallone's Rocky Balboa character, the actor never made good on promises that he would get payment.
The former heavyweight boxer claimed Stallone improperly used his name to promote the "Rocky" films, while Stallone countered that Wepner had already benefited by making public appearances as "the real Rocky."
Stallone has said that he was working on a screenplay about a fighter when he watched Wepner nearly go the distance with heavyweight champion Muhammad Ali in 1975.
"What I saw was pretty extraordinary," Stallone said during a 2001 interview that became part of a "Rocky" anniversary DVD. "I saw a man they call `the Bayonne Bleeder' who didn't have a chance at all against the greatest fighting machine supposedly that ever lived."
"Rocky," which won the Oscar for best picture in 1977, is the story of a down-and-out club fighter from Philadelphia who gets a long-shot chance at the heavyweight title. Stallone played Balboa, who trained at a meat-cutting plant and nearly dethroned the champ.
Stallone, 60, is now working on "Rocky Balboa," the sixth film in the franchise, which is set for release Dec. 22.
Wepner, now 67, was a New Jersey club fighter who got his nickname from the damage he was prone to receive even while winning.
He was plucked from obscurity by promoter Don King, who offered him a title shot against reigning heavyweight champion George Foreman. But when Ali defeated Foreman, Wepner got the match with Ali. He knocked Ali to the canvas in the ninth round before losing by technical knockout 19 seconds before the final bell.