The US conservative TV station has apologised and reportedly paid the former Fox & Friends co-host $20m to drop her case.
Ms Carlson's allegations led to Fox's chief executive, Roger Ailes, leaving the channel in July.
She had complained that Mr Ailes victimised her and ruined her career after she rejected his advances.
"We regret and apologise for the fact that Gretchen was not treated with the respect and dignity that she and all of our colleagues deserve," said 21st Century Fox, which owns Fox News.
Ms Carlson, 50, had claimed that Mr Ailes, 76, one of the most prominent figures in US television, first demoted her then sacked her after she spurned him.
For many years she had co-hosted the Fox and Friends morning show before being given her own programme in 2013.
Mr Ailes denied the allegations but resigned after an investigation by 21st Century Fox brought forward similar complaints from other female employees.
Another presenter, Greta Van Susteren, resigned on Tuesday, but Fox News did not give a reason for her abrupt departure after 14 years. One source described it as a financial disagreement.
Roger Ailes became a leading figure in US cable news after Rupert Murdoch brought him in to set up Fox in the mid-1990s.
For almost 20 years, Mr Ailes was the top dog as his channel posted annual profits of hundreds of millions of dollars, and transformed the cable news landscape, which had been dominated by CNN.
Ms Carlson said: "I am gratified that 21st Century Fox took decisive action after I filed my complaint.
"I want to thank all the brave women who came forward to tell their own stories and the many people across the country who embraced and supported me."
In her complaint, made after she was sacked in June, Ms Carlson's lawyer said that Mr Ailes "unlawfully retaliated against Carlson and sabotaged her career because she refused his sexual advances and complained about severe and pervasive sexual harassment".
Mr Ailes worked on the presidential campaigns of Richard Nixon, Ronald Reagan and George H W Bush before going on to set up Fox News in 1996.
He has reportedly advised the campaign of Republican presidential candidate Donald Trump since leaving the network.
Mr Ailes continues as an informal adviser to Rupert Murdoch, executive chairman of 21st Century Fox.
Fox News channel has settled a sexual harassment case brought by one of its former presenters, Gretchen Carlson.