Legal action filed against Cedars-Sinai Medical Centre in Los Angeles more than four years ago had been scheduled to go to trial next month, but lawyers for Paxton's wife Louise and their two children filed a notice in the city's Superior Court on Friday that they had agreed to settle the case.
The terms of the settlement are confidential, and the family's legal team said only: "The matter has been resolved to the mutual satisfaction of the parties."
The agreement must still be approved by a judge.
Paxton, 61, who starred in films including Apollo 13, Titanic and Aliens, died on February 25, 2017.
The cause was a stroke that came 11 days after surgery to replace a heart valve and repair aorta damage, according to his death certificate.
The legal action, filed a year later, alleged the surgeon used a "high risk and unconventional surgical approach" that was unnecessary and that he lacked the experience to perform, and that he played down the procedure's risks.
The misguided treatment caused Paxton to suffer excessive bleeding, cardiogenic shock and a compromised coronary artery, the action alleged, and it said Cedars-Sinai knew the surgeon tended to "engage in maverick surgeries and show suboptimal judgment".
The defendants said in court documents that Paxton and his family knew and understood the risks and voluntarily went on with the surgery. They said there was no negligence that led to his death.
Paxton, who was born and raised in Fort Worth, Texas, was among the industry's busiest actors from the early 1980s until his death, amassing nearly 100 credits, also starring in Twister and Weird Science.
