Rolling Stone magazine agreed to pay $1.65 million (£1.29 million) to settle a defamation lawsuit filed by a University of Virginia fraternity over a debunked story about a rape on campus, the fraternity said on Tuesday.

The settlement closes the final chapter of a lengthy legal saga sparked by the 2014 story "A Rape on Campus," which was retracted after a police investigation found no evidence to back up the harrowing account of the woman identified in the story only as "Jackie."

The Virginia Alpha Chapter of the Phi Kappa Psi fraternity, which had sought $25 million, said in a statement that its members are glad to be able to put the "ordeal" behind them.

"It has been nearly three years since we, and the entire University of Virginia community, were shocked by the now infamous article, and we are pleased to be able to close the book on that trying ordeal and its aftermath," the fraternity said.

Rolling Stone declined to comment.

The story by Sabrina Rubin Erdely, of Philadelphia, about Jackie's gang rape set off a firestorm at the University of Virginia and in schools nationwide and prompted police to launch an investigation into the alleged assault. The article crumbled after other news outlets began asking questions and police found no evidence to back up Jackie's claims. The story was officially retracted in April 2015.