The domestic guru fell from grace in 2004 when she was found guilty of conspiracy, obstruction of justice, making false statements, and perjury following the suspicious sale of her ImClone Systems shares.
After serving five months in a Alderson, West Virginia, prison camp, the 65-year-old went on to spend six months under house arrest in her Katonah, New York, home last year.
In May, the Securities Exchange Commission filed a civil suit against Stewart, which she claimed she would fight.
However, the Wall Street Journal reports Stewart has paid $195,000 to the SEC and her former stockbroker, Peter Bacanovic, has also been fined $75,000.
Under the agreement, Stewart cannot act as director for a public company for five years--meaning her role at her company Martha Stewart Living Omnimedia is limited.
Mark K. Schonfeld, director of the SEC's northeast regional office, says, "This settlement achieves everything we sought to accomplish in pursuing this case.
"The combination of monetary relief and future professional restrictions serve both to sanction the defendants' insider trading and to restrict them from future positions of investor trust."
Stewart says, "This brings closure to a personal matter and my personal nightmare has come to an end."
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