Sacked Mackay agrees settlement with Cardiff
"Today I have reached a settlement agreement dropping all claims I have made against Cardiff City Football Club," Mackay said in a statement released by Slater and Gordon Lawyers.
"I did not want to be in litigation and believe that it is in the best interests of all parties to have a clean break and move on."
Mackay, 42, led Cardiff to promotion from the Championship last season but was sacked in December 2013 after falling out with the club's owner Vincent Tan.
Since his dismissal, Mackay has criticised Tan for not sufficiently preparing the club for the Premier League, but in his statement he apologised to the Malaysian businessman "without reservation".
"The club's owner Mr Vincent Tan invested heavily in the club and supported our decisions in our push for promotion to the Premier League. Without him this would not have been possible," Mackay added.
"My thanks to all those at the club and the fans who have supported me during my time in Wales. If I have caused any offence to anyone during this time, especially to Vincent Tan, then I apologise without reservation."
Former Manchester United striker Ole Gunnar Solskjaer succeeded Mackay, but the Norwegian was unable to prevent the south Wales club from succumbing to relegation.
In a statement of their own, Cardiff said: "Cardiff City Football Club can confirm that Malky Mackay has dropped all legal claims against the club, bringing a number of issues to an end and allowing both parties to move on.
"The agreement represents a positive outcome for the club. We now look forward and focus fully on planning for next season and the challenge of regaining Premier League status."
Meanwhile, Cardiff centre-back Juan Cala has been suspended for three matches by the Football Association after being found guilty of misconduct.
The charge related to the Spaniard's conduct as he left the field following his dismissal for a professional foul in Cardiff's 4-0 defeat at Sunderland last month. He was also fined �12,500 ($21,100, 15,300 euros).
"Cardiff City's Juan Cala will serve a three-match suspension with immediate effect after a misconduct charge against him was found proven," read a statement on the FA website.
The ban means that Cala will miss his side's final game of the season at home to Chelsea on Sunday, as well as Cardiff's first two Championship matches next season.