As part of the resolution, Holmes has to give up majority voting control over the company and reduce her equity in the privately-held company.
Theranos, its CEO Elizabeth Holmes, and former president Sunny Balwani, have been charged with "massive fraud" by the SEC.
The SEC alleged that Theranos "made numerous false and misleading statements in investor presentations, product demonstrations, and media articles" about the company's blood-testing technology while raising more than $700 million.
Theranos and Holmes have reached a resolution with the SEC, while Balwani, who left the company in 2016, will be tried in federal district court in California.
Holmes, who founded Theranos back in 2003 when she was 19, agreed to give up financial and voting control of the company.
"This package of remedies exemplifies our efforts to impose tailored and meaningful sanctions that directly address the unlawful behavior charged and best remedies the harm done to shareholders," the SEC's Enforcement Division co-director Stephanie Avakian said in a release.
"As part of the settlement, neither the Company nor Ms. Holmes admitted or denied any wrongdoing," Theranos said in a statement.