The vociferous consumer group threatened Quaker with a lawsuit in October, as part of a litigation project on food labeling and marketing that it began in 2005.
Quaker is said to be removing descriptions that its oatmeal is a "unique" whole grain food that "actively finds" cholesterol and removes it from the body.
The case brings to light the fine line for manufacturers between making permitted health claims, or exaggerating a product's potential benefits to lure consumers.
The US Food & Drug Administration (FDA) has been increasingly getting the message out that it will police the industry for any infractions, but groups such as CSPI bring cases to public attention so as to anticipate this process.
"Of course, the Food and Drug Administration should be the one policing food labels…" said CSPI executive director Michael Jacobson.
Since 1997, Quaker Oats' unmodified instant oatmeal products are eligible to bear a heart health claim which states: "soluble fiber from oatmeal as part of a low saturated fat, low cholesterol diet may reduce the risk of heart disease."
But CSPI objected to what it dubs are inflated claims on the company's packaging, including a graph that "greatly exaggerated" the cholesterol-lowering potential of oatmeal.
"We are pleased that we have been able to resolve CSPI's stated concerns and appreciate your assistance and cooperation throughout the process," said Dean Panos, of Quaker's representing firm Jenner & Block, in a memo to CSPI.
This is not the first time CSPI has threatened to slap a lawsuit on a company over label claims.
The group recently sued the makers of green tea drink Enviga, Coca-Cola and Nestlé, for making claims the beverage has calorie burning properties.
In 2006, the CSPI said it dropped a lawsuit it had filed against Kentucky Fried Chicken over heart-healthy claims surround its new soybean oil for deep-frying.
In addition, the group challenged Procter & Gamble to more clearly label the fat substitute olestra on Pringles Light Fat Free potato crisps.
"Oatmeal is a healthy food, but that's no excuse to give people the impression that it will miraculously remove cholesterol from your arteries or to otherwise exaggerate its benefits," said CSPI litigation director Steve Gardner.
In December, the FDA held a hearing on how to regulate labeling and health claims for functional foods and beverages, such as Enviga, which have no legal category of their own to date.