A five year trademark dispute meant that Google was not allowed to use the name Gmail in the UK.
In 2005 a company called Independent International Investment Research claimed it had used "Gmail" first.
Google claimed at the time that the settlement IIR asked for was "exorbitant" and dropped the name.
Within a year of launching the free e-mail service in the UK, Gmail became Google Mail.
While early adopters received a gmail.com address, all subsequent new accounts were given the suffix googlemail.com.
"Since 'gmail' is 50% fewer characters than 'googlemail' we estimate this name change will save approximately 60 million keystrokes a day," wrote software engineer Greg Bullock on Google's Gmail blog.
British users with Googlemail addresses will be asked whether they wish to change their address. It will not affect the settings or functionality of the accounts, Google said.
The firm is not releasing the details of the new settlement but states that the matter is "happily resolved".
