Holmes's attorney Jonathan Wolfe confirmed the deal 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.
"This result could not have been achieved without the hard work of my partner Gary Skoloff and our co-counsel Allan Mayefsky, Michael Mosberg and Larry Trachtenberg of Aronson Mayefsky and Sloan and Peter Walzer and Chris Melcher of Walzer & Melcher in California.
"We thank Tom's counsel for their professionalism and diligence that helped bring about this speedy resolution."
Cruise's attorney Dennis Wasser separately told PEOPLE, "All the lawyers and the parties are happy that it's done, the deal was closed and we wish everyone well."
There was no immediate word on the details, but Holmes and Cruise said in a separate statement they focused on protecting daughter Suri, 6.
"We are committed to working together as parents to accomplish what is in our daughter Suri's best interests. We want to keep matters affecting our family private and express our respect for each other's commitment to each of our respective beliefs and support each other's roles as parents," says the statement from Holmes and Cruise's reps, Nanci Ryder and Amanda Lundberg respectively.
Sources close to both sides say that Cruise, 50, and Holmes, 33, were working on an arrangement in which Suri lives in New York with her mother and her father is given generous visitation rights.
Sources say Holmes's decision to file for divorce in June stunned Cruise.
She and Suri recently moved into a new 3-bedroom apartment in New York City, where the pair have been spotted out while Cruise was at home in Los Angeles with his teenage kids, Connor, 17, and Bella, 19.
Reporting by MARY GREEN