The suit followed comments made by Hudak in the run-up to last year's provincial election, when he suggested Wynne "oversaw and possibly ordered" the destruction of documents connected to the $1.1-billion cancellation of two gas plants in 2011.
The gas plant scandal was a major issue during the election, which saw Wynne returned to power with a majority government.
The suit also complained that MacLeod, who was then the Tory energy critic, had on Twitter compared Wynne to disgraced former U.S. president Richard Nixon.
Wynne called for an apology and retraction, only to be rebuffed by Hudak, MacLeod and the Ontario Progressive Conservatives. The PCs called the suit an attempt to muzzle the Opposition.
But in a joint statement issued Thursday, Wynne, Hudak and MacLeod said the matter has been dropped.
"We are pleased to put our legal battles behind us," the statement said.
The statement said debate during the run-up to the 2014 election "at times became personal." It then appeared to sound a conciliatory note.
"The lawsuit between us, and the comments that led to it, did not reflect our view that the other is in fact a great mother / father, an honourable person and a dedicated public servant," said the statement.
The statement said no further comments would be made on the matter.
Hudak resigned as leader shortly after the election. MacLeod continues to represent Nepean-Carlton.