Hatton reached an undisclosed but "mutually acceptable" deal with Billy Graham on the third day of a hearing at Manchester's Civil Justice Centre.
Graham, who accused Hatton of failing to pay him in relation to two fights against Juan Lazcano and Floyd Mayweather, said after the hearing that he was happy with the outcome and keen to move on with his life.
Graham, 53, told the hearing that he had always received 10 per cent of the purse in Hatton's fights. He claimed that he was not paid at all for Hatton's fight against Juan Lazcano at the City of Manchester Stadium in May 2008, and he was owed money for the clash with Floyd Mayweather in America in December 2007. He launched his claim after he accused the fighter's father Ray of short-changing him by getting him to sign an agreement for a fixed amount of just over 451,000 - despite a total purse of more than 10 million after lucrative pay-per-view deals in both the US and the UK for the Mayweather fight alone. Before the settlement was reached, Hatton spent more than an hour in the witness box.
When asked what he thought of Graham, Hatton said: "We were just totally on the same wavelength when it came to boxing."
But Graham's barrister Jonathan Crystal accused the fighter of being "extremely miserly" in his praise of his former coach. Graham was Hatton's trainer between 1997 and 2008, covering 45 fights, 22 of which were world title contests, the court heard.
A joint statement released after the hearing said: "Billy Graham, Ricky Hatton and Punch Promotions Ltd have today agreed to put their differences behind them and have ended the court proceedings on mutually acceptable terms. Those terms shall remain confidential to the parties."
Speaking after the hearing, Graham said: "I have had to put up with a lot for three years, physically and everything else mentally. It's all over and done with now and I want to get back on with my life." Asked what he thought about a potential return to the ring for Hatton, Graham responded: "He will be foolish to fight again." He has been there, he has done it. He should just get on with his life now."