Holmes, 33, filed for divorce from the 50-year-old actor after five years of marriage late last month.
The lawyers from both party are now in talks to settle issues including child custody, visitation and child support for their six-year-old daughter Suri as well as property division, reported TMZ online.
"There are no immediate plans to go to court unless the negotiations fall apart. Should things go well, the settlement could be completed in New York, the city where Katie filed for divorce," a source said.
Holmes is seeking sole legal and residential custody of Suri, and it is believed that she would more likely gain it in New York than in California, where Cruise was thought to be filing his own papers.
The "Mission Impossible" star's attorney Bert Fields has confirmed that Cruise would not be playing out his problems in the media unlike "the other side", with Holmes seen out in New York a number of times and once even with Suri.
"Tactically we can't say where Tom will file a divorce case and if he'll be seeking joint custody of Suri. We are letting the other side play the media until they wear everyone out and then we'll have something to say," Fields said.