The case has caused concern among free speech advocates because it was seen as a form of cross-border repression.
The Malaysian Communications and Multimedia Commission had already acknowledged in a statement earlier this month that it had reached a settlement agreement on January 12, and had dropped criminal proceedings against Hunter.
That said it was also withdrawing a civil case in Malaysia against Hunter.
Hunter was sued in connection with articles he had posted on his Substack online newsletter.
"The Malaysian government's use of SLAPPs (strategic lawsuits against public participation ) and willingness to engage in transnational repression signals a significant escalation in its willingness to silence critical voices," IFEX, an international coalition of organisations promoting free expression, said in a statement in November.
It said that Malaysia's use of criminal defamation laws to target individuals beyond its borders is alarming, as it serves to intimidate writers, artists and others from expressing views on issues of public interest and concern.
PEN International, Human Rights Watch and the Committee to Protect Journalists were among the groups that protested Hunter's arrest.
While the complete mediation agreement is confidential, Hunter was able to tell The Associated Press aspects that were already on the public record.
He said he made an apology and retracted about 10 articles, and the charge against him was withdrawn in the Bangkok South Criminal Court with no costs or penalties awarded.
The charge of defamation by publication is punishable by a maximum prison term of two years and a fine of 200,000 baht ($A9,079).
He also said his Substack was unblocked in Malaysia.
Malaysian Communications and Multimedia Commission said it was unable to offer fresh comment on Monday's court hearing because of the Lunar New Year holidays in Malaysia.
Hunter, who lives in southern Thailand, was arrested at Bangkok's Suvarnabhumi Airport on September 29, 2025, as he was about to board a flight to Hong Kong.
He was jailed overnight and then released on 20,000 baht ($A908.73) bail, and his passport was seized.
"I've got my passport back and I'm free to travel again in the next couple of days," Hunter told the AP.
He said he was not totally satisfied with the resolution of the case because he felt he was treated unfairly under the law and the general threat of this type of lawsuit still existed.
He said he will stay in Thailand and that he was working on a book about the type of lawsuits he faced.
Akarachai Chaimaneekarakate, a Thai lawyer who helped Hunter's defence, said he agreed that the threat of transnational SLAPP suits remained in Thailand.
He pointed out that in Hunter's case, "the process is the punishment".
