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The Yorkshireman parted company with the club on March 6 after three years in charge.
Agreement has also been reached with McCarthy’s number two, Ian Evans, who initially remained on the books.
"The club can confirm that settlement terms have been agreed and finalised with both Mick McCarthy and Ian Evans following their recent departure from the club," said chief executive Peter Walker in a statement released through the club’s official website.
Former midfielder Kevin Ball, the club’s Academy manager, was appointed caretaker in the wake of McCarthy’s departure.
The Black Cats have played three games under Ball’s leadership and lost them all, and are currently 17 points adrift of safety with just seven matches left to play.
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