The 48-year-old actor previously blamed the Iron Man star for pushing him out of the money-spinning Marvel franchise in 2013 - but Terence subsequently decided to resolve the situation after he was threatened with legal action.
Speaking on Watch What Happens Live with Andy Cohen, the Hollywood star shared: "We just realised that life is too short. We both realised. Life's too short. Everybody is making money now."
Terence previously said Downey Jr. "took the money that was meant to go to me and pushed me out" of the Iron Man movies, after he starred in the original hit in 2008.
Asked about the fallout from his comments, Terrence said: "There was a lot of drama from it. They wanted to sue me. They're not going to sue me this time."
AdvertisementAdvertise with NZME.
The row first came to light during one of Terrence's previous appearances on Watch What Happens Live, which prompted Andy to ask whether he should apologise for instigating the drama.
But Terrence said: "I shouldn't have got drunk. It's my fault. I'm the one that did it. I ran my mouth."
Back in 2013, Terrence suggested Downey Jr. abandoned him when he was trying to secure a better deal for himself for his role in the second Iron Man movie.
Speaking at the time, he explained: "We did a three-picture deal, so that means that you did the deal ahead of time. It was going to be a certain amount for the first one, a certain amount for the second one, a certain amount for the third.
"They came to me with the second and said, 'Look, we will pay you one-eighth of what we contractually had for you, because we think the second one will be successful with or without you.' And I called my friend - that I helped get the first job - and he didn't call me back for three months."