The 45-year-old rapper has agreed to make payments to 79-year-old Bruno Spoerri for using his instrumental 'On the Way' in his track 'Versus' without seeking permission, reported Ace Showbiz.
The agreement marks the end of an 18-month legal dispute over the track.
Jay Z, who has three-year-old daughter Blue Ivy with wife Beyonce, initially denied using the music at first but has now admitted he did so without attribution.
According to website, Bruno - who composed 'On the Way' in 1978 - initially rejected an earlier offer to settle the dispute because he felt the payment was too low, but has confirmed the matter has now been resolved.
According to a civil lawsuit, written by 21-year-old Rymir's legal guardian Lillie Coley, Jay submitted fraudulent information to the court to deliberately quash the paternity claim, which is believed to be a fake address.