The French firm originally took the online seller to court in Europe accusing it of being involved in trade mark infringements committed by users of its website.
Today, the cosmetics manufacturer and auctioneer have settled their differences vowing to work together, according to Agence France Presse.
"The parties believe that cooperation, rather than litigation, is the way forward to fight against counterfeiting," L'Oreal and eBay said.
Having originally been accusatory of eBay, L’Oréal now says in a statement that it "acknowledges eBay's commitment in the fight against intellectual property infringement."
Reports suggest that the settlement includes financial terms in favour of L’Oréal but that this would all remain confidential.
They have history…
The deal comes more than two years after the European Court of Justice decided that eBay should be held responsible if it did not step up its anti-counterfeit measures.
The EUCJ ruling means that online marketplace operators cannot turn a blind eye to the unauthorised sale of counterfeit products and means that a website owner who facilitates or fails to stop the unauthorised sale of branded products via its website may also be guilty of infringing a trade mark owner's rights.
The case originated in 2007 when L’Oreal brought a claim against eBay in the UK, France in Belgium and France.
The French cosmetics company argued that unauthorised goods were being sold on the marketplace without consent, citing eBay as jointly liable for trade mark infringements.
The English High Court referred the case to the EUCJ in 2009 after it questioned if eBay could be held responsible for the sale of counterfeit goods.
In 2008, the internet auction house was ordered to pay luxury goods firm LVMH €40m for failing to prevent the sale of counterfeit goods and genuine perfumes without authorisation.
At the time, LVMH welcomed the verdict saying that it was an important step in the protection of brands and designs against ‘parasitic practices’.