Such an agreement is possible in German law, depending on the charges. It means the 83-year-old Ecclestone preserves his innocence and is spared the prospect of a lengthy trial.
Judge Peter Noll told the court the suspicion of bribery against Ecclestone could not, by and large, be backed up in a trial. He gave Ecclestone one week to pay $100 million - $99 million to the state and $1 million to a children's charity.
"The trial is temporarily suspended until you've honoured your commitments and then it'll be permanently discontinued," Noll said. "If you don't honour your commitments, we'll continue the trial. I assume we'll only ever see each other again on TV."
Ecclestone, 83, replied in English: "Thank you very much. I will honour my commitment."
Ecclestone went on trial in April over allegations he paid a $44 million bribe to a former German banker to facilitate the sale of a major stake in the motor sport business eight years ago.
Ecclestone, a former used car salesman who became a billionaire by building the sport into a global money spinner over the past four decades, denied any wrongdoing.
The state prosecutor told the court earlier on Tuesday that due to Ecclestone's "advanced age" and "other extenuating circumstances", they supported the proposed settlement.
"The charges could not, in important areas, be substantiated," Judge Noll said. He added that any other charges against Ecclestone that remained were not so serious as to warrant the continuation of the trial.
Ecclestone's lawyers applauded the settlement after the court heard more than 100 hours of testimony. "A conviction of Mr. Ecclestone could not be expected with any likelihood," his lawyers said in a joint statement.
They also dismissed the suggestion that Ecclestone had bought his way out of the trial.
"Through this abandonment, the presumption of innocence in favour of Mr. Ecclestone remains intact ... The monetary compensation is geared to his income and financial situation."
Private equity group CVC, the largest shareholder in Formula One with a stake of 35 percent, has said it would have fired Ecclestone if he were found guilty.
The state prosecutor added that during the course of the trial it was becoming increasingly clear that the bribery charges would be difficult to prove.
If he had been found guilty, the British billionaire could have faced up to 10 years in jail, although a prison term would have been unlikely.
Under German law, judges, prosecutors and the defence can agree to dismiss a case or settle it with a light punishment, although terms for such an agreement are strictly defined.
A spokeswoman for the Munich court, Andrea Titz, said a settlement did not mean there was an admission of guilt.
"With this type of ending ... there is no ruling on guilt or innocence of the defendant," she told reporters. "He is neither acquitted nor judged - rather this is a special type of ending a procedure which is in theory available to all types of cases."
Ecclestone is accused of channeling cash to jailed BayernLB banker Gerhard Gribkowsky to smooth the sale of a major stake in the business by the bank to private equity fund CVC, which became the largest shareholder in Formula One in 2006.
Ecclestone was accompanied at the trial his wife, Fabiana Flosi, who watched from the spectator section of the court.
Despite his age, Ecclestone attends almost every Grand Prix and remains central to the sport's commercial success. He has always dismissed talk of retirement and has no obvious replacement ready to take over when he does finally quit or get forced out.
The German law is intended to ease the burden on courts of hearing relatively minor cases and to spare first-time offenders a criminal record. The sums agreed under the settlement are often paid to the state or charity organisations.
According to German broadcaster ARD, the procedure was used by ex-chancellor Helmut Kohl in 2001 to end a trial for accepting illegal party donations and by ex-defence minister Karl-Theodor zu Guttenberg to prevent charges of copyright infringement in his dissertation. Former cyclist Jan Ullrich also paid to halt a German investigation into doping charges.
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