As per the agreement, to be signed soon, the PCB will retain its host fees and also receive an additional payment as reasonable compensation for loss of hosting rights that it would have enjoyed had it hosted the matches on Pakistan soil.
The PCB, on its part, has agreed to withdraw its legal proceedings against the ICC.
The resolution was reached during a meeting between ICC President David Morgan and PCB Chairman Ejaz Butt.
According to the agreement between the PCB and commercial arm of the world governing body "the PCB would be free of its liabilities and obligations associated with hosting matches during the tournament, including the location of the tournament secretariat which had originally been set for Lahore."
"This resolution is good for world cricket and provides an improved platform for the ICC Cricket World Cup 2011 as we now have a degree of certainty surrounding the event that was not there while the dispute was ongoing," Morgan said in a statement.
"I am glad we were able to come to an amicable agreement and I believe this is a fair resolution for the PCB and the ICC," Morgan said.
The ICC Board in April had stripped the host status of Pakistan, taking away the 14 matches it was originally allocated because of security situation in that country.
Morgan also promised Pakistan to bring cricket back in that country as and when security improves.
"When the position in Pakistan, from a safety and security point of view, becomes satisfactory to the ICC and its specialist security advisors as well as to visiting teams, then international cricket will return to Pakistan," he said.
PCB chief Butt also expressed satisfaction at the outcome of the talks.
"The PCB is content with the settlement that has been reached. We are able to see this dispute from the other side. We realise also the logistical and administrative difficulties that would be associated with organising our matches in the other three co-host countries.
"Our number-one priority is that cricket in Pakistan must not be allowed to suffer unduly and I believe this agreement is the best possible outcome for the game," he said.
