No details have been given of the settlement but Yahoo will be covering legal costs.
The case alleged that Yahoo had provided information to the Chinese government that had then been used to prosecute the dissidents.
Yahoo said it had to comply with Chinese laws to operate in the country.
A statement released by the World Organization for Human Rights USA, which brought the case, said Yahoo had decided to settle the case following criticism at a US Congressional hearing on 6 November.
So, all it takes to get results is to get called to the carpet by Congress, eh?