Show creator Steve Levitan said the six adult cast members who had recently sued ABC had reached a deal with 20th Century Fox Television, the studio that produces the show. A Fox spokesman also confirmed the news.
"We're very happy. We can't wait to get started Monday morning," Levitan told reporters at a meeting of TV critics in Beverly Hills.
"It's a distraction I'm happy to see end," he added.
The sitcom about the everyday lives of a family of fathers, sons, daughters and grandkids living in suburbia is among ABC's top shows, and it won the Emmy - U.S. television's highest honor - for best comedy last year. It is nominated again this year, and is scheduled to return to airwaves on September 26.
Earlier this week, cast members Sofia Vergara, Eric Stonestreet, Jesse Tyler Ferguson, Julie Bowen and Ty Burrell sued the network for violating their contracts in a move largely seen as a bid for higher salaries amid contract re-negotiations.Ed O'Neill, who portrays the family patriarch, later joined his fellow cast members.
As the dispute dragged on, a first "table read" rehearsal for the season was canceled.
The cast members' lawsuit will be dropped as part of the agreement, the Fox spokesman said. Financial terms were not disclosed.
Earlier on Friday, ABC Entertainment President Paul Lee told TV critics he was optimistic a deal would be reached and was confident "Modern Family" would start its season on schedule.