Both firms had claimed the other had infringed the rights to its technologies.
The announcement came hours before a ruling that could have blocked Nvidia from importing some of its products into the US.
Although the agreement brings the dispute to a close, Nvidia said the terms of the deal were limited.
"The settlement includes the licensing of a small number of patents by each company to the other, but no broad cross-licensing of patents or other compensation," it said.
Samsung added: "We are happy to resolve this dispute through a fair settlement."
Neither company is disclosing any further details.
The clash was first made public in September 2014, when Nvidia held a news conference during which its chief executive declared the South Korean tech giant was "using our [graphics] technology for free in their devices".
Jen-Hsun Huang went on to say that his firm was suing the smartphone-maker after months of failed talks.
Two months later, Samsung counter-sued claiming its innovations had been used without permission in Nvidia's Shield tablets and chips.
When the International Trade Commission - a US agency that investigates patent disputes - looked into the matter, it ruled that Samsung's graphics processors had not infringed Nvidia's patents.
But in a follow-up decision, it said Nvidia's chips had violated three of Samsung's patents.
The ITC had been due to announce whether this warranted an import ban, but will no longer do so because the case has been dismissed.

Polish MEP Janusz Korwin-Mikke made the gesture in July as he spoke against the influx of migrants into the EU.
In October, Italian MEP Gianluca Buonanno wore a Hitler moustache and gave the salute during a debate where the German chancellor was present.
The pair have been fined $3,380 (Â£2,200) and are suspended for 10 days, but can still vote.
The European Parliament Bureau decided on Monday to confirm the sanctions imposed by the parliament's president Martin Schulz earlier this month, a spokesman said.
Mr Korwin-Mikke was protesting against the transportation of migrants across the EU. He said "This time it is 'ein Reich, ein Volk, ein Ticket'" and later made a speech referring to migrants as "human garbage".
Mr Buonanno wore a T-shirt combining the images of Adolf Hitler and Angela Merkel during a debate on the Volkswagen emissions scandal, and a day later gave the Nazi salute with Mrs Merkel and French President Francois Hollande present.
Both MEPs had been involved in this type of incident before, the European Parliament said.
Mr Buonanno tweeted a photograph of himself in the European Parliament on Tuesday, saying: "They banned me but I went in anyway!"
He was embroiled in more controversy earlier this month when he brandished a gun during a TV interview during a row over Italy's self-defence laws and announced he was setting up a fund to help residents in his town buy guns.
Samsung and computer-chip-maker Nvidia have settled a two-year patent battle.
[NEXT_CONCEPT]
Two right-wing MEPs have been suspended from the European Parliament for making Nazi salutes during sessions.