The 62-year-old chief executive of WPP was at London's High Court for the end of his fiercely contested battle with former colleagues Marco Benatti and Marco Tinelli.
He had accused Milan-based media company FullSix, its founder Benatti and chief executive Tinelli of waging a crude internet campaign against him in March last year.
He claimed they were behind a blog alleging criminal fraud, deception and money laundering, emails containing a "vicious'' jpeg image of himself and senior executive Daniela Weber, and they had labelled them "the mad dwarf and the nympho schizo''.
His case, which was founded on "a series of inferences", hinged on complex and strongly challenged forensic computer evidence.
Weber, 44, the chief operating officer of WPP Italy with whom Sorrell once had a personal relationship, also sued for invasion of privacy. She accepted £30,000.
Her evidence -- by videolink from Milan -- was heard behind closed doors with the press and public excluded.
After 24 hours of out-of-court negotiations, Sorrell's counsel, Desmond Browne QC, told Mr Justice Eady that the two sides had come to terms 10 days into the hearing with the defendants yet to give evidence.
Reading from an agreed statement, he said: "FullSix Spa, FullSix SAS, Marco Benatti and Marco Tinelli repeat their acceptance that the allegations complained of in the blogs in the libel action are untrue and that the emails which are the subject matter of the privacy action infringe the claimants' privacy.
"For his part, Sir Martin Sorrell acknowledges that Mr Benatti and Mr Tinelli have given assurances that they were not personally responsible and he is not pursuing his complaint that Mr Benatti or Mr Tinelli were personally responsible.
"The claimants have accepted payment of £100,000 to Sir Martin for the publication of the libel, and £30,000 and £20,000 for Miss Weber and Sir Martin respectively for the dissemination of the offending emails as money paid into court on behalf of all the defendants without admission of liability on February 9 2007.
"The parties have agreed terms as to costs.''
The action concerned the aftermath of the end of a 21-year friendship between Weber and Benatti and the termination by Sorrell, in January last year, of Benatti's consultancy as country manager for WPP Italy, which is the subject of separate litigation in the commercial court.
Benatti and Tinelli did not seek to justify the libels but denied that they were responsible for disseminating them or the privacy-infringing emails.
Their stance was that if anyone in their workforce was responsible, it was unauthorised personal misconduct for which they were not liable.
After the settlement was announced, Sorrell said: "I think today has been a very good day for us.
"I think the scale of the damages speak for themselves. The reason for taking the action was the assault that was made on both WPP and my personal and professional reputation."
He said: "It is difficult to imagine a more vengeful or more vindictive attack or anybody stooping so low or in such a cowardly, lashing out anonymous fashion."
Sorrell said that the total of £50,000 was a, "record for privacy damages."
He said: "That is ten times more than we can find elsewhere."