Lawyers for each side declined to comment on any details, including whether there had been changes to the custody agreement. The pop star has had full custody and has been living in Bahrain since shortly after his acquittal last year on child molestation charges.
Marta Almli, one of Rowe's lawyers, said the settlement addresses all outstanding disputes between the parties.
Jackson's lawyer declined to comment.
The case has a long history in Los Angeles Superior Court.
In 1999, when Rowe filed for divorce, she and Jackson opted to pay a private judge to handle the case, a service often used by celebrities and the wealthy. The judges, usually retired from the Superior Court, are privately paid by the parties in the dispute but are required to follow the same rules of public access and procedure as those in public courtrooms.
The private judge, Stephen Lachs, allowed Rowe, a former nurse in the office of Jackson's dermatologist who gave birth to Prince Michael Joseph Jackson Jr. in 1997 and Paris Michael Katherine Jackson in 1998, to terminate her parental rights. At the hearing, Rowe said: "These are his kids ... they're not my kids."
But after Jackson was arrested on child molestation charges, Rowe changed her mind and said she wanted custody.
Then Lachs changed his mind, saying he had erred when he acted without appointing anyone to represent the interests of the children.
The matter wound up before the Court of Appeal, and in a published opinion the justices sided with Rowe and said Lachs had abdicated his responsibilities.
The matter brought scrutiny to the issue of private judging and prompted court officials to bring the Jackson case back into the public courthouse.
Court officials also issued stern reminders that court documents and hearings must remain public and that parties seeking to seal documents must make the request to public court officials.