Robert Tafel and another condo owner sued SMU in 2005, accusing the school of taking control of a complex across the street from campus, illegally forcing out residents and allowing it to fall into disrepair so it could be bulldozed for the library. The school denied the claims.
SMU attorney Mark Lanier declined to reveal terms of the deal Friday.
Larry Friedman, Tafel's attorney, said his client "accomplished what he wanted to accomplish" and insisted it was never about money.
SMU decided at the end of 1998 to begin buying up the approximately 350 units at University Gardens, a 40-year-old condominium complex across the street from the campus in University Park.
The school eventually bought 97 percent of the units, then stacked the homeowners association board with SMU employees and others affiliated with the university who did not own units or live at the complex.
The holdouts were Tafel, who owned one unit, and Gary Vodicka, who had four units. Vodicka's suit against the university continues.
"It's still out there and pending and hotly disputed," Vodicka said.
The men said SMU breached its legal duty to the other condo owners by allowing the building to fall into disrepair so it could be torn down. He contends the school acquired the condo property with the library project in mind.
SMU has said the process of acquiring the complex was lawful and that it did not intend to bid for Bush's presidential library when it began buying condos in 1999.
The school bulldozed the condos in 2006. Later that year, it became apparent SMU would be the site of Bush's library. The land upon which the condos once sat will be part of the library grounds. Officials hope to break ground on the project next year and open it in 2013.