The Training Day star was all set to reteam with director Tony Scott for their fifth film collaboration, following previous successes Crimson Tide, Man on Fire, Deja vu and the latest movie, The Taking of Pelham 1 2 3.
Washington stepped down from Unstoppable, about a runaway train filled with toxic chemicals, in June (09) amid rumours he was being forced to take a pay cut, leaving the future of the movie in doubt.
However, Variety.com reports the actor has now settled his differences with studio heads at 20th Century Fox and is back on board.
Details of his new contract and salary agreement have not been made public.
Production is scheduled to begin in the autumn (09).