Video of Dao, 69, being physically removed from the April 9 flight quickly went viral.
Dao's attorney said that the amount remains confidential as one of the provisions of the settlement.
He also praised United CEO Oscar Munoz.
"Mr. Munoz said he was going to do the right thing, and he has. In addition, United has taken full responsibility for what happened on Flight 3411, without attempting to blame others, including the City of Chicago. For this acceptance of corporate accountability, United is to be applauded," said attorney Thomas Demetrio.
United released a statement, saying: "We are pleased to report that United and Dr. Dao have reached an amicable resolution of the unfortunate incident that occurred aboard flight 3411. We look forward to implementing the improvements we have announced, which will put our customers at the center of everything we do."
Dao was one of four passengers randomly selected to get off UA3411 to Louisville in order to make room for four United employees who needed to fly after no one voluntarily gave up a seat. Dao refused, saying he was a doctor and had patients he needed to see in the morning. Three Chicago Aviation Police officers boarded the plane and physically removed Dao, dragging him down the aisle and off the plane.
Dao's attorney said he suffered a concussion and lost two teeth.
United announced changes to its customer policies Thursday.