According to a Monday filing with a Manhattan federal court, the companies have dropped claims against each other with prejudice, meaning they cannot be brought again.
Citigroup sued AT&T in June, calling "AT&T thanks" too similar to the "thankyou" that the New York-based bank had used since 2004 on its own customer programs.
AT&T countered that Citigroup has no monopoly over the word "thanks" and sought a court order to that effect.
The resolution may help preserve a relationship between Citigroup and AT&T dating to 1998 that includes 1.7 million U.S. customers with co-branded credit cards.
"We have decided not to pursue this matter any further and look forward to continuing to work with AT&T," Citigroup spokeswoman Jennifer Bombardier said in a statement.
AT&T spokesman Fletcher Cook said: "We consider the matter closed."
The case was dropped 11 days after U.S. District Judge Katherine Forrest in Manhattan rejected Citigroup's request for a preliminary injunction against "AT&T thanks."
She said Citigroup did not show that "AT&T thanks" would necessarily confuse customers or cause it irreparable harm, though "AT&T thanks" and "thankyou" share some letters and pronunciation, and both "convey a message of gratitude."
The case is Citigroup Inc v. AT&T Inc et al, U.S. District Court, Southern District of New York, No. 16-04333.