Under the settlement, announced after the stock markets closed, Hurd agreed to relinquish the about $30 million in stock he was given in his severance package.
HP and Oracle said in a joint statement that Hurd will be able to perform his duties as an Oracle co-president without spilling HP's trade secrets.
Earlier , Hurd publicly debuted as a co-president at Oracle, showing off a new data-storage computer at the company's annual conference.
Hurd was forced out as HP's chief last month in the wake of a sexual harassment investigation. He accepted the post with Oracle in early September, prompting HP's lawsuit.
His appearance onstage reinforces the important role Hurd is expected to play at Oracle despite the controversy, which he did not address during his talk.
Hiring Hurd was a coup for Oracle and its chief executive Larry Ellison.
The rivalry between HP and Oracle intensified when Oracle closed its acquisition of Sun Microsystems early this year; HP has said hiring Hurd has further strained the companies' alliance.
HP is expected to announce its selection of Hurd's replacement before a meeting with analysts scheduled for next week.