The 120-pound canine named Onion became the focus of a dispute after it fatally mauled 1-year-old Jeremiah Eskew-Shahan nearly two years ago.
The city of Henderson, which had sought to euthanize the animal, announced Thursday that it had reached a settlement and would give Onion to the New York-based Lexus Project.
City officials said in a statement that they decided to give up the court fight to spare the boy's family more pain.
"As part of the court proceedings, family members would have been required to testify and relive the horrible details of that day," Bud Cranor, spokesman for the city of Henderson, said in a statement. "We didn't want the family to have to endure that tragedy all over again."
Lexus president Robin Mittasch said the dog is out of Nevada and will be placed in a rescue. She declined to say where, but said it would not be to the Colorado sanctuary mentioned earlier.
Mittasch told The Associated Press she is "overjoyed" with the outcome, "and so happy that (Onion's owner) and her family finally has closure that brings her peace."
Jeremiah's family had been celebrating his birthday on April 27, 2012 when the child tripped and fell on the dog while it was sleeping in a dark room. The boy lifted himself up by the dog's ears and the startled animal grabbed and shook him, causing fatal head and facial injuries.
The city declared the dog vicious and the owner turned him over to be euthanized. But the Lexus Project intervened, saying Jeremiah's grandmother, the dog's owner, had changed her mind and wanted to release the dog to the group.
In December, the Nevada Supreme Court returned the case to Clark County District Court to determine the facts of the case. At issue was whether owner Elizabeth Keller voluntarily surrendered ownership to the city.
The city's statement said that the Lexus Project indemnified the city of future liability for the dog. The city is also requiring Lexus to pay for a memorial for Jeremiah that will go in a Henderson park.
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