During a court hearing in Los Angeles, California, yesterday, Gibson and Oksana Grigorieva agreed the sum, which will be paid over a four-year period.
The couple were also awarded joint legal and physical custody of their young daughter Lucia.
Settlement: Mel Gibson and Oksana Grigorieva both appeared at the Los Angeles County Courthouse today
Gibson has promised to pay Lucia the same inheritance that his other seven children are set to receive.
Under the terms of the settlement, Grigorieva and Lucia are allowed to remain in the Sherman Oaks house in which they they currently live.
When Lucia turns 18, the property will be sold and the money will be placed in a trust for her.
Gibson and Grigorieva's settlement would appear to end a lengthy feud, which made headlines across the world when the Russian musician accused Gibson of attacking her.
Pay up: The actor has been ordered to give his ex $750,000
A smile for the cameras: Oksana leaving court today
In the recordings, Gibson could be heard ranting at his ex-girlfriend and unleashing a string of racist andsexist verbal threats.
On one occasion, when Grigorieva accused the actor of hitting her and breaking her teeth, he screamed back: 'You f***ing deserved it. I'll put you in a f***ing rose garden you c***.'
Gibson, 55, and Grigorieva, 41, were both in court for yesterday's settlement hearing.
The ex-lovers sat either end of a bench, in front of LA Superior Court Judge Peter D. Lichtman, and made no attempt to communicate with one another.
They sat quietly, next to their lawyers, as Judge Lichtman read out the terms of the agreement.
The settlement states that Gibson will pay $750,000 in three separate instalments.
The first $250,000 was due to be paidonce yesterday's deal was signed. The other payments will be made on September 15, 2013 and January 1, 2016.
This sum is significantly less than the $15 million offer Grigorieva is said to have turned down last year.
She declined the amount in June last year in order to 'see where the chips might fall', according to reports at the time.
The settlement also states that Gibson and Grigorieva will have joint legal and physical custody of Lucia. Further details about the custody agreement were discussed behindclosed doors.
Custody drama: Oksana with her daughter Lucia last month
Neither of them is allowed to write any books or articles about their relationship - or release any audio recordings to the media.
If Grigorieva breaches this agreement, she will forfeit the remaining balance of her $750,000.
At the end of the hearing Gibson addressed the judge, thanking him for bringing their dispute to a 'reasonable conclusion'.
Grigorieva also thanked the judge andher lawyer, Daniel Horowitz, said she had settled the case because it was 'in the best interest of Lucia'.
After their bust-up last year, Grigorieva had claimed that Gibson punched her in the mouth, choked her and pointed a gun at her.
