Dash accused Daniels of failing to pay back $2 million (£1.3 million) he loaned the director to make 2004 film The Woodsman, and then played down a credit agreement on his subsequent movie ventures when the rap boss agreed to roll the filmmaker's debts over.
Dash claimed Daniels gave him written assurance of executive producer credits and 50 per cent of the rights to the 2004 film, and a guarantee that the investment would be repaid with interest.
In return, Dash helped promote Daniels' career.
In his lawsuit, filed last year (14), the rap mogul demanded credits, ownership of and compensation from Daniels' hit projects The Butler and Empire.
Daniels responded by accusing Dash of not being specific about the provisions of the reworked contract, insisting that the rap boss' investment came with risks.
On Tuesday (07Apr15), both parties agreed to put the dispute behind them and work together on future projects.
Dash tells The Hollywood Reporter, "I never like having a beef with anyone - especially from my culture."
The parties have filed papers dismissing the lawsuit, with Dash's attorney Natraj Bhushan insisting the agreed settlement is "creative" and "fair".