RENO, Nev. - Gov. Jim Gibbons and first lady Dawn Gibbons reached a settlement in their divorce yesterday, avoiding a messy public trial that could have had damaging repercussions for the first-term Republican's struggling re-election bid.

Lawyers and the first couple negotiated through the night until 3 a.m. yesterday, then met with a judge in a Reno courtroom before announcing that they had agreed on what will become the first divorce decree ever issued for a sitting Nevada governor.

"This matter is settled," Gary Silverman, the governor's lawyer, told Washoe District Family Court Judge Frances Doherty.

At a hearing in the self-proclaimed "Divorce Capital of the World," Doherty approved the pact and said that a decree would be issued within 60 days.

Dawn Gibbons, 55, accused her husband of having affairs with a Playboy model and the estranged wife of a Reno doctor. She also accused him of using her to foster his political ambitions.

The women denied being romantically involved with the governor and described their relationships as "good friends," but one relationship caused Gibbons political embarrassment after it was revealed that he used his state-issued cell phone to send more than 860 personal text messages over several weeks in 2007. When word of the texting emerged, Gibbons apologized and said that he reimbursed the state $130.

Outside the courtroom, Dawn Gibbons told reporters, "I wish Jim the very best.

"I've been honored to be first lady for three years," she said. "I did not want to do anything that would dishonor my state. The agreement reflects that."

The governor declined to comment.