The Hollywood ex-couple, who announced their split less than a fortnight ago, have agreed on financial matters as well as arrangements for their daughter Suri.
Holmes's attorney Jonathan Wolfe confirmed in a statement to People: "The case has been settled and the agreement has been signed. We are thrilled for Katie and her family and are excited to watch as she embarks on the next chapter of her life.
"We thank Tom's counsel for their professionalism and diligence that helped bring about this speedy resolution."
Cruise and Holmes released a joint statement only an hour ago asking for privacy in the wake of their break-up.
The statement insisted that the former couple respected each other's beliefs following allegations that Cruise's devotion to Scientology was a factor in their break-up.
It had already been reported that the pair were negotiating a settlement.
Photo gallery - Tom Cruise and Katie Holmes's relationship in pictures:
Copyright: Rex Features