Yeshiva University said on Thursday that it would recognize an L.G.B.T.Q. student club on campus, bringing to an end a bitter yearslong legal battle over whether the school could deny the group official recognition on religious grounds.

Yeshiva, a Modern Orthodox Jewish institution with campuses in Manhattan and the Bronx, had refused for years to recognize the club, which had been known as the Yeshiva University Pride Alliance. The case made its way through state and federal courts, even reaching the U.S. Supreme Court, and was closely watched by religious organizations and religious freedom groups.

But on Thursday, its administration said in a statement that it and the students had “reached an agreement, and the litigation is ending.” As part of the settlement, the students said the Pride Alliance would be renamed Hareni, a religious term they had suggested.

In a statement, the school said the club “will seek to support L.G.B.T.Q. students and their allies and will operate in accordance with the approved guidelines of Yeshiva University’s senior rabbis.”

It added: “The club will be run like other clubs on campus, all in the spirit of a collaborative and mutually supportive campus culture.”

The battle at Yeshiva University had brought one of the country’s most liberal cities to the front line of a nationwide debate over religious freedom and civil rights and whether houses of worship, religiously affiliated organizations or even pious individuals could be compelled to provide public accommodations to people with differing views.

Yeshiva’s decision came at a time when L.G.B.T.Q. rights appear under threat across the country from the Trump administration, which has fiercely attacked elite universities and mounted a campaign against the participation of transgender people, in particular, in public life.

Throughout years of legal wrangling, the school took sometimes extreme steps to deny the club official recognition, including imposing a brief ban on all on-campus clubs. The dispute drew the attention of state lawmakers, who criticized the university’s position and suggested it might have imperiled its ability to access public funds.

The announcement on Thursday represented a notable reversal for Yeshiva, which did not explain why it decided to change its approach.

In a statement, Hanan Eisenman, a university spokesman, said that the students who filed the lawsuit had actually agreed to a proposal Yeshiva made in 2022, when administrators surprised the students by forming a club “grounded” in Jewish religious law that they called “an approved traditional Orthodox alternative to YU Pride Alliance.”

“Our students’ well-being is always our primary concern,” he said. “We are pleased that our current undergraduate students will be leading the club announced today which is the same club approved by our senior rabbis two and a half years ago.”

But Zak Sawyer, a spokesman for the plaintiffs, said the settlement went far beyond what Yeshiva proposed in 2022, which he said “was created without student input, had no members, held no events and never existed outside of a press release.”

“Hareni has secured written guarantees ensuring it has the same rights and privileges as other student clubs, including access to campus spaces, official student event calendars and the ability to use ‘L.G.B.T.Q.’ in its public materials — none of which existed under YU’s prior ‘initiative,’” he said.

In interviews, members of the new club said they hoped the settlement would ensure that L.G.B.T.Q. students felt valued.

“I think this will really show to other people that there is no separation between being queer and being a Jew and that you are allowed to be a queer Jew on campus at Yeshiva University,” said Hayley Goldberg, 21, one of the club’s co-presidents.

Indeed, Ms. Goldberg and Schneur Friedman, 22, another co-president, said the club’s new name emphasized the importance of Judaism in their lives.

It was taken from a phrase recited before prayer, which they thought had special meaning for L.G.B.T.Q. acceptance: “I hereby take upon myself to fulfill the commandment of loving your fellow as yourself.”

The university’s administration had for years rejected student demands to recognize an L.G.B.T.Q. club because it said doing so would conflict with Orthodox Jewish religious teaching. While many Jewish congregations support L.G.B.T.Q. rights, many Orthodox leaders interpret the Torah as promoting traditional ideas of gender and sexuality.

After a group of students and alumni sued Yeshiva in 2021, its administration argued in court that its refusal was legally protected because it was exempt from New York’s civil rights laws as a Jewish religious institution.

Religious exemptions to such laws are common, but in recent years have increasingly been used to deny equal treatment to L.G.B.T.Q. people.

Yeshiva is structured as a modern American university with graduate programs in law and business that enroll many non-Jewish students. The university is home to roughly 6,000 students on four campuses in Manhattan and the Bronx.

Critics of the school’s legal argument that it was a religious institution said Yeshiva had more in common with religiously affiliated colleges and universities, like Fordham or Notre Dame, than it did with Christian seminaries, which are exempt from nondiscrimination laws because they train priests.

Judges in New York rejected the university’s religious freedom arguments, which led the school to file an unusual emergency stay to the Supreme Court in 2022. The court ruled in a 5- to-4 decision that Yeshiva must abide by lower court rulings and pursue any challenges in state court before it appealed to the Supreme Court.

Mr. Friedman said the university had approved a number of events that the club could host, including movie nights, panel discussions and holiday events.

But it declined to specify what sort of activities might not be approved. Still, Mr. Friedman described Thursday’s agreement as “a massive step.”

“The fact that this is happening very much within the guidelines of Yeshiva is significant,” said Mr. Friedman.

“If this can happen here, it has wider implication for the Orthodox Jewish community as a whole,” he said. “Even if there are compromises, it has a wide effect, which is very exciting.”