The Hollywood couple signed a deal, with Tom, 50, winning generous visitation rights of Suri, six.
Katie, 33, filed for divorce in New York two weeks ago, demanding sole custody of Suri to keep her from the control of Tom and his Scientology cult.
After round-the-clock talks over the weekend, they came to a deal on custody, child support, and splitting their assets — thought to be worth £175million.
Katie spent six hours in her lawyers’ Manhattan office on Saturday, emerging around 6pm wearing a barely-disguised grin.
The former Dawson’s Creek star is walking away with up to £10million, on top of her personal wealth of £15million.
Top Gun star Tom considered filing his own divorce in California, where he would be more likely to win joint custody.
He caved in to many of Katie’s demands to stop Scientology from being dragged through the mud in court. A source said: “He has gone quietly.”
A statement by the couple seemed to confirm their clash over religion, saying: “We want to express our respect for each other’s commitment to each of our respective beliefs.”
Meanwhile, a US website last night claimed that Tom will not be allowed to subject Suri to Scientology — and their daughter must be accompanied by her nanny and bodyguards when visiting him.
A source added: “Suri isn’t permitted to be exposed to anything Scientology related.”
A statement from Katie Holmes’ lawyer Jonathan Wolfe praised Tom Cruise’s team’s “professionalism and diligence”.
The statement read: “The case has been settled and the agreement has been signed.
“We are thrilled for Katie and her family and are excited to watch as she embarks on the next chapter of her life.
“We thank Tom’s counsel for their professionalism and diligence that helped bring about this speedy resolution.