The Lost King focused on the role of historian Philippa Langley in the search, which involved archaeologists from the University of Leicester.
Mr Taylor was the deputy registrar of the University of Leicester at the time and was later played in the film by actor Lee Ingleby.
In June, Judge Jaron Lewis ruled the film portrayed Mr Taylor as having “knowingly misrepresented facts to the media and the public” about the discovery, and as being “smug, unduly dismissive and patronising”, which could be defamatory.
The case was due to proceed to trial, but lawyers for Mr Taylor told a hearing on Monday that the parties had settled the claim.
As well as agreeing to a financial settlement, the defendants are to add a card to the front of the film in versions in England and Wales.
The card will read: “Whilst in this film there is a character called Richard Taylor who is shown to be an employee of the University of Leicester, the portrayal of him is fictional and does not represent the actions of the real Mr Taylor, who was employed by the University of Leicester as its deputy registrar, and acted with integrity during the events portrayed.”
No edits or cuts to the film were part of the settlement, the defendants said.