SONICblue filed first in December 2001, claiming that its rival was infringing on a newly-awarded patent covering technologies for pausing and playing back television programmes. TiVo retaliated in January 2001, accusing SONICblue of infringing on a multimedia "time warping" system.
The two companies said in a joint statement issued on Friday: "We believe our energies are better spent expanding the market for DVRs rather than fighting with each other."
Under the agreement, each side will dismiss its claims against the other without prejudice.
SONICblue is still facing lawsuits filed by major entertainment companies including AOL Time Warner, MGM and Disney and also three TV networks.
The companies claim that features offered by SONICblue's DVRs, which allow users to remove commercials and to send copies of recorded programmes to other DVRs over the internet, infringe copyrights.