"It was agreed that we two should focus more on cementing our leadership in the global market by cooperation, instead of engaging in all-consuming patent disputes," Samsung Display said in a statement late on Monday.
"What's most important for both of us is upgrading our competitiveness globally," LG said.
The two firms had accused each other of stealing liquid-crystal display (LCD) and organic light-emitting diode (OLED) technology and key engineers.
The OLED technology helps produce screens that are thinner, consume less power and offer a sharper picture than conventional flat-panel panels and is seen as a future growth driver in the TV market.
The two rivals' mother companies -- Samsung Electronics and LG Electronics -- are the world's top and second-largest TV makers respectively.
LG claimed last year that key Samsung products, including its global hit Galaxy S smartphones, violated LG's OLED technology and sought financial damages and injunction against five Samsung devices.
The high-profile dispute led Seoul's trade minister to arrange a meeting between the two firms' CEOs in February.