The Sacramento Bee reported Tuesday the settlement was reached with Italian manufacturer Ledraplastic.
Roger Dreyer, the attorney who represented the NBA team and injured swingman Francisco Garcia, told the newspaper the settlement amount was confidential.
But he described it as extremely favourable to his clients.
An email to Ledraplastic was not immediately returned.
The Kings and Garcia claimed the ball exploded in October 2009 while Garcia was balancing on it and lifting weights, causing injuries that included a broken forearm.
He missed four months during the first year of a contract extension. The Kings sought to recover his salary. Garcia sued for loss of earning capacity, and pain and suffering.