"The matter has been resolved," lawyer Grant Walker confirmed to AFL.com.au on Thursday night.
There have been reports speculating damages in the settlement could be in the range of $800,000 to $1million but no parties have confirmed this publicly, and AFL.com.au hasn't been able to independently verify those reports.
Robinson, the club's former high performance boss, sued the club over his dismissal.
Nicknamed 'The Weapon,' he was stood down on the day the club self reported its controversial supplements program in February 2013.
Robinson famously gave a 'tell-all' interview to the Seven Network, where he claimed sports scientist Stephen Dank had been hired to run a supplements regime described as "black-ops".
But Robinson won't be commenting this time around - AFL.com.au understands there are strict confidentiality clauses in the settlement preventing Robinson or Essendon from saying anything further.
Leading QC David Galbally has been central to Robinson's case. He was in South Africa when contacted by AFL.com.au on Thursday night and said he couldn't comment but indicated he was on his way back to Australia.
Robinson's case was set for trial next month, where he was seeking around $2million in damages, claiming he was a scapegoat.
The settlement avoids potential embarrassment for Essendon and the AFL, with potential key administrators such as ex-AFL CEO Andrew Demetriou and current chief Gillon McLachlan possibly called to give evidence.
As the Bombers face a crucial decision on coach James Hird's future, this latest development is another indication of chairman Paul Little's desire to bring all matters relating to the saga to an end.
It's expected Essendon's board will meet again either at the weekend or on Monday to discuss Hird's position after he went against the club's wishes by appealing a Federal Court decision over ASADA's investigation.