The social media giant agreed to pay undisclosed damages to the teenager after failing in its attempt to get the action thrown out of court.
Legal experts said the case - the first of its kind - could see social media firms face an avalanche of fresh claims for damages and shine a spotlight on their responsibility for inappropriate content.
The girl, who cannot be identified, claimed the nude image was obtained after she was blackmailed and was then published as a form of revenge.
Her legal team launched High Court proceedings in Belfast after it was allegedly posted on a so-called shame page on Facebook several times between November 2014 and January 2016.
She sought damages for misuse of private information, negligence and breach of the Data Protection Act.
Timeline | Facebook’s rise
2004:Mark Zuckerberg creates Facebook in his Harvard dorm room2006:Facebook allows anyone over 13 to join, introduces the news feed2007:Sells a 1.6% stake to Microsoft for $240m2008:Reaches 100 million users2009:Introduces "like" button2010:Facebook becomes profitable2012:Acquires Instagram for $1bn in cash and stock2012:Reaches one billion users2014:Buys messaging app WhatsApp for $19bn2015:Extends internet.org effort to provide internet access to rest of world2016:Launches Facebook Live broadcasting feature2017:Reaches two billion monthly active users
Pearse MacDermott from McCann and McCann Solicitors, which represented the teenager, said the settlement "moved the goal posts" in terms of how social media providers such as Facebook and Twitter respond to indecent and abusive posts and images.
“Facebook always said it was up to the individual user to be responsible, not them,” he said.
“It now puts the onus on the provider to look at how they respond to indecent, abusive and other such images put on their platform.
"Had these images been put in a newspaper or on the TV there would be serious repercussions and those same repercussions should also apply to whatever platform is used in the social media world.”
The teenager’s lawyers had likened the posting of the photos to child abuse. They argued that Facebook had the power to block any republication, which should have been a “red-line” issue for the company.
The tech giant insisted that it always responded to breaches brought to its attention and took this particular image down as soon as it was notified.
Mr MacDermott said police delays in the handling of the case meant officers were unable to prosecute the person who posted the images.
Five days had been set aside for the civil trial but Edward Fitzgerard QC, for the girl, told the court on Tuesday that the case had been settled. Facebook will also pay the teenager's legal costs.
