According to court records, Lohan settled the case on Wednesday with Tracie Rice, who said she was traumatized and lost a job due to the incident, which resulted in one of Lohan's arrests for drunken driving.
Rice was a passenger in a car driven by the mother of Lohan's former assistant, who the actress pursued down the scenic Pacific Coast Highway in July 2007. The chase ended with Lohan's arrest in the parking lot of the Santa Monica Police Department; Rice has said she thought the actress was trying to carjack her.
Lohan is also being sued by three men who were in the sport utility vehicle the actress used to pursue Rice.
Details of the settlement were not released.
The case was delayed because of Lohan's continuing legal troubles. The "Mean Girls" actress was arrested twice for driving under the influence in 2007, and she remains on probation. She has struggled to comply with the terms of her release, with three separate judges sending her to jail since July 2010.
The starlet was sentenced to four months in jail in April for violating her probation by taking a necklace without permission from a Venice jewelry store, and on Thursday surrendered to authorities and began serving her term under house arrest. She is expected to spend roughly 35 days on home confinement.
The Associated Press contributed to this report.