"Politics should never play a role in the fair administration of justice and civil service personnel decisions," McCabe said in a statement.
He added, "I hope that this result encourages the men and women of the FBI to continue to protect the American people by standing up for the truth and doing their jobs without fear of political retaliation."
McCabe was fired in March 2018 by Attorney General Jeff Sessions, who accepted an internal FBI recommendation that he be terminated. McCabe was fired less than two days before he was set to retire and become eligible for full pension benefits.
Under the terms of the settlement, the Justice Department agreed to rescind and vacate McCabe's firing, update his employment record to reflect him as having retired in good standing and restore his full retirement pension, including a lump sum payout of benefits he should have received after he left the agency. The department also agreed to update McCabe's file to show him as having been employed continuously by the FBI from 1996 until his retirement in 2018.
McCabe, a target of relentless attacks from Trump, took the reins of the bureau in 2017 — from May until August — after the abrupt firing of Director James Comey, who was leading the investigation into Russian interference in the 2016 presidential election. Director Chris Wray then took over after he was confirmed by the Senate.
McCabe stepped down from the FBI in January 2018 but remained on the federal payroll before his official retirement that March. McCabe was at the center of tensions between the White House and the FBI during the Russia investigation and was reported to have been under pressure from Trump to quit.
McCabe sued in 2019, arguing that he was wrongly dismissed because he was not sufficiently loyal to Trump.
McCabe said in the lawsuit that Trump demanded his "personal allegiance" and "sought retaliation" when he "refused to give it." He added, "Sessions, Wray, and others served as Trump's personal enforcers rather than the nation's highest law enforcement officials, catering to Trump's unlawful whims instead of honoring their oaths to uphold the Constitution."
A Justice Department spokesperson did not immediately respond to a request for comment.