Speaking outside Dublin High Court, Louis Walsh said he would not have wished what happened to him on his worst enemy.
"I'm very relieved," he said.
"This has had a terrible effect on me guys. It was all lies.
"And I'm very satisfied with this total vindication for me, but I remain very angry at the treatment I received at the hands of The Sun."
An apology addressed to Louis Walsh was read out on behalf of News Group Newspapers to the High Court in Dublin:
The Sun published an article in its editions of 23 June 2011, in which we reported that Louis Walsh was being investigated in relation to a sexual assault on Leonard Watters.
In fact it transpired that Leonard Watters had made a false statement to An Garda Siochana, and he has since been convicted in relation to this matter.
The Sun fully accepts that the alleged assault did not occur in the first place and Louis Walsh is entirely innocent of any such assault.
The Sun unreservedly apologises to Louis Walsh for any distress caused to him as a result of our article.
Louis Walsh won a defamation case against The Sun over a story last year based on a false allegation that he sexually assaulted a man in a Dublin night-spot.
Walsh took legal action against the publisher for damages over the article published on 23 June 2011 with the headline "Louis Probed Over 'Sex Attack' on Man in Loo".
The man who made the allegation - an unemployed dance teacher called Leonard Watters - was jailed for six months in July for wrongly accusing Walsh of groping him after a Westlife concert in April 2011.
The X Factor judge Louis Walsh has settled a 500,000 euro (£403,500) defamation action against Rupert Murdoch's News Group Newspapers out of court in Ireland over a story based on an unfounded sex assault allegation.
X Factor's Ella Henderson stole the show tonight with a simple and slowed down version of the Grease classic The One That I Want.Read the full story ›
X Factor judges Gary Barlow and Louis Walsh last night shook hands on the live show and put their near week-long feud behind them.Read the full story ›
The X Factor executive seen whispering in judge Louis Walsh's ear before singer Carolynne Poole's controversial exit has denied that the show is a fix.
Producer Richard Holloway was seen talking to Walsh just before the judges delivered their verdict on the ITV1 show which saw Louis force a deadlock.
Viewers accused the show of being a fix when the Irish judge initially appeared to save Poole, before backing eccentric singer Rylan Clark.
"We regularly chat to the judges during the show - they don't wear earpieces like (host) Dermot (O'Leary) so we have to speak to them throughout the programme, on anything from timings to running order changes," he said.
"On Sunday night I was telling Louis the order the judges would vote in and that he would be last."
X Factor judge Louis Walsh has opened up hostilities with Strictly Come Dancing once more by branding the rival show a "warm-up act" for his programme.
The programmes will embark on a ratings war from tomorrow as they prepare to stage their live heats each Saturday, both hoping to grab the bigger audience.
But Walsh was dismissive of the BBC1 dance contest - which begins earlier than X Factor - and made barbed comments about its 84-year-old host Sir Bruce Forsyth.
"Strictly is like a warm-up act for the X Factor, with a very old frontman," Walsh said today.
The two shows have long been in a battle for viewers. The two programmes do not directly compete tomorrow night with Strictly finishing 15 minutes before The X Factor begins airing at 8pm.
However the two shows will have a five minute overlap on the following Saturday.
X Factor judge Louis Walsh has said that the start of the new series of the talent show on Saturday night is 'the best first show ever'Read the full story ›
Louis Walsh flew out of Manchester and into Kansas city last night. He is due to fill in for Simon Cowell on The X Factor USA.Read the full story ›