In a joint statement, the two companies said they had reached an agreement to "restructure their ongoing business relationship and settle all existing litigation between the companies." The statement also said that Navistar's current contract to supply diesel engines to Ford would conclude at the end of this year.
As part of the settlement, Ford will also make an undisclosed payment to Navistar. The original contract dates back to 1979, Reuters reports.
The dispute started over an issue with the development of the next-generation F-150 pickup. Navistar claimed that Ford planned to produce a 4.4L diesel engine for the F-150 on its own, violating part of the original contract.
The two companies will, however, continue working together on a medium duty commercial truck project as well as the supply of engines in the South American market.