Jackson's solicitor, Marcus Barclay, told Mr Justice Popplewell in London the litigation had been settled "amicably" on confidential terms.
He said that on 24 June 1992, a photograph and article were published on the front page of the newspaper and similar articles were published on 29 and 30 June and 15 July.
Mr Barclay told the court that Mirror Group Newspapers Ltd, and the Daily Mirror's former editor Richard Stott, acknowledged that Mr Jackson was not hideously disfigured or scarred as was suggested in the articles.
"Representatives of the Daily Mirror have since met directly with the plaintiff, and have seen with their own eyes that the photographs which were published, albeit in good faith, do not accurately represent the plaintiff's true appearance.
"The defendants regret the injury which has been done to the plaintiff's reputation, and have agreed that they will not repeat these allegations."
Mr Barclay added: "Michael Jackson and the Mirror look forward to a better relationship now that this litigation has been amicably resolved."
Kevin Bays, solicitor for the defendants, told the court: "The photographs were taken honestly and were not tampered with ...
"The Mirror wishes, through me, to express its sincere apologies for the plaintiff's distress which it has caused and is pleased to have resolved its differences with him."