WATCH NOWThe stars sued the newspaper in January over a story saying they would separate and had agreed custody arrangements.
Appearing in London's High Court, the couple's lawyer said that News Group Newspapers now accepted the allegations were "false and intrusive".
The couple were not present for Thursday's hearing.
The actors' action, for misuse of private information and breach of the 1998 Data Protection Act, was concerned with a front page story dated 24 January, which had the headline "Pitts all over".
The article alleged that Jolie and/or Pitt had visited a divorce lawyer in December 2009, and that the couple had reached an agreement regarding the division of their assets.
But a statement from Schillings Lawyers noted that Sorrell Trope, identified by some publications as the divorce lawyer in question, had never met the couple.
"I have never met... your clients or had any involvement with either of them. The foregoing is true with respect to all other members of this firm," said Trope in a letter quoted in the statement.
In court on Thursday morning, lawyer Keith Schilling said the News of the World, which argued that it had acted in good faith, had now agreed to publish an apology.
It will also pay Pitt and Jolie's costs and damages, which they intend to donate to their charity, the Jolie-Pitt Foundation.
The newspaper confirmed that a settlement had been reached, but declined to comment further.
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