Yao Wei Wu, 46, suffered fractured bones around his eye and multiple bruises.
Police later apologized and said the officers were responding to a 911 call of a domestic assault when they went to the wrong door and mistook Wu for someone else.
Gabriel Yiu, who was part of a citizens group that formed to support Wu, said the settlement is a relief.
"He is quite happy that there is closure of this case and he and his family can move back to their daily life," said Yiu.
But Wu is still waiting on the courts to decide if the officers' actions will be subject to a public hearing, said Yiu.
Pulled from the house
At the time of the attack in January 2010, Wu, who does not speak English, told CBC News through an interpreter that as soon as he opened the door the plainclothes officers pulled him out of the house and beat him.
Wu said he was hit multiple times on the back, head and face, but said he did not resist because the men were armed with guns.
It was only after police handcuffed Wu and asked his name that they appeared to realize they had the wrong man, he said.
The Delta chief of police, Jim Cessford, was asked by Vancouver police to conduct an investigation of the beating. In his report Cessford found the officers were simply doing their duty and Wu was resisting arrest.
Wu's lawyer Cameron Ward has called Cessford's conclusion "ridiculous."
Ward said the Delta Police Department was negligent in its investigation of the incident by allegedly failing to interview the two Vancouver police officers named or any other material witnesses.
Ward also said the Delta police failed to conduct a thorough examination of the crime scene and failed to make a timely report to Crown counsel.Suggest a correction