Haeyoung Yoon, who represents Ehab Elmaghraby, said she believed it was the first settlement involving the claims of people detained after 11 September.
Elmaghraby, a former restaurant worker, was held at the Metropolitan Detention Centre in Brooklyn from 1 October 2001 until August 2002.
He was not charged with any crime connected to terrorism, but pleaded guilty to credit card fraud and was deported in August 2003.
Yoon said he now said he was innocent of the credit card fraud.
In a lawsuit filed in August 2004, Elmaghraby and a Pakistani man, Javaid Iqbal, said their rights were violated in US custody and sought compensatory damages.
They also argued that the government would not let them appeal against their solitary confinement in a special unit of the detention centre.
Their lawsuit named John Ashcroft, the former US attorney general, and dozens of other federal officials.
Elmaghraby said he was shackled, shoved into walls, punched and called a terrorist at the facility.
"Despite the fact that the US admitted no wrongdoing, they are compensating Mr Elmaghraby for the injuries he suffered"
Yoon said he was subjected to repetitive strip searches, and a correction officer penetrated his anal cavity with a flashlight.
She added that while in custody, Elmaghraby's thyroid condition was misdiagnosed as asthma, worsening it. He wanted to continue with the lawsuit, but settled because of his mounting medical costs.
Yoon said: "Despite the fact that the US admitted no wrongdoing, they are compensating Mr Elmaghraby for the injuries he suffered."
Cited for brutality
The Metropolitan Detention Centre was cited for brutal treatment of detainees in a 2003 report by the Department of Justice's inspector general.
Iqbal's case against the government continues.
A federal judge in September 2005 rejected a claim by Ashcroft that the lawsuit should be dismissed partly because the threat of foreign terrorism exempts the government from following rules made in peacetime.
Ashcroft said in a response to the lawsuit that the threat of terrorist attacks meant the government should not have been required to follow regulations allowing inmates to appeal against assignment to the special unit.
More than 80 men were classified as suspected terrorists and were jailed in high-security cells at the Brooklyn facility between 14 September 2001 and 27 August 2002.