The rapper and the supposed victim are understood to have come to an agreement out of court, and the teen no longer wishes to go ahead with prosecution, according to TMZ.
Kanye, 36, reportedly chased the 18-year-old before punching him in the waiting room of a Chiropractor's office, where Kim was waiting to be attended.
It is understood that the incident was triggered earlier this month when the teen hurled racial slurs at Kanye’s fiancée, Kim Kardashian.
While the District Attorney has not yet decided whether to charge Kanye with battery, if it does go ahead it will be without a willing witness.
The alleged racial abuse by the victim may also provoke a lack of sympathy towards him, TMZ has reported.
While $250,000 sounds like a large settlement sum, according to the American publication, the victim's demand soared to the "upper six figures".
Kanye's soon-to-be mother-in-law Kris Jenner spoke of the incident during an interview on Australia's 2DayFM Breakfast Show earlier this month.
After hosts Jules Lund, Merrick Watts, Sophie Monk and Mel B gave Kris a rundown of the incident, saying, "Kanye assaulted an 18-year-old man by punching him in the face. He was defending Kim," she replied, "Well, that sounds like, a lot like what I heard."
The Kardashian matriarch continued: 'I do know that how it started was this person got really a lot of racial, hateful, horrible things that he was saying. Apparently many times. Very hateful person."
She added, "And I think that’s where it started. I'm not quite sure how it ended."