Munich-based publishing house Droemer said they have reached a settlement with a woman who filed a libel lawsuit contesting author Senait Mehari's depiction of her as a brutal military commander in his book "Heart of Fire."
Doemer conceded that plaintiff Almaz Yohannes never commanded a training centre for child soldiers or ordered children to be executed.
"Rather, she was a 12-year-old student at the Tsebah school" in Eritrea, the company said, adding: "It was a regrettable error."
It said it would pay Yohannes damages without prejudice.
Mehari has drawn criticism from several Eritreans who disputed the veracity of her book, which was published in 2004.
It tells the story of a nine-year-old girl who is pushed by her father to train and then fight with a rebel group against a rival liberation army in the early 1980s.
Mehari has since acknowledged that she never fought at the front or even fired a gun but said the story told in the book is nonetheless similar to the experiences of thousands of children. A film based on the book and directed by Italian-born Luigi Falorni premiered at the Berlin Film Festival in February.