The Northern Irishman has been a vocal critic since the breakaway tour launched in 2022 and signed up a host of big names, causing a rift that threatened to tear golf apart.
McIlroy previously accused some of those who jumped ship as being duplicitous and that he would rather retire than join LIV.
But he is beginning to mellow and says it is no longer his job to fight the battle.
"I think at this point, I was maybe a little judgmental of the guys who went to LIV golf at the start, and I think it was a bit of a mistake on my part because I now realise that not everyone is in my position or in Tiger Woods' position," the former world number one told the Stick to Football podcast.
"We all turn professional to making a living playing the sports that we do, and I think that's what I realised over the last two years. I can't judge people for making that decision."
LIV Golf launched amidst great fanfare and with cries of 'sportswashing' in 2022 with winner Charl Schwartzel walking off with an eye-watering $4.75 million for winning the first event in London - the biggest prize in golfing history.
Last year American Talor Gooch was the overall LIV Golf champion, scooping around $36 million from a prize pool of $300 million. While the PGA Tour has increased prize money in response, McIlroy said it is a futile battle.
"I wouldn't say I've lost the fight against LIV, but I've just accepted the fact that this is part of our sport now," he said. "Competition is good to help improve the sport of golf overall, but the PGA tour competing with LIV and the Saudi's money is completely unsustainable.
"You're never going to win a fight if you're going money for money because we've seen that in other sports where no one is spending money like the Saudis."
Peace, of sorts, broke out last year when a shock merger between the PGA Tour and LIV Golf was announced out of the blue, although negotiations are ongoing.
"I've come to realise that if you've got people or a sovereign wealth fund spending money in your sport, ultimately that's a good thing," McIlroy said of Saudi Arabia's Public Investment Fund (PIF). "But you want them to spend it the right way and spend it on things that are important to the game.
"Instead of giving someone $100m, why don't you put $50m into a grassroots programme for The Royal and Ancient Golf Club or the United States Golf Association (USGA) so that you can help to grow the game, and not spend it trying to buy talent."
McIlroy says its not his job to 'fight the good fight' but still takes issue with players 'talking crap' about the PGA Tour or European DP World Tour after signing for LIV.
"I don't begrudge anyone for going and taking the money and doing something different, but don't try to burn the place down on your way out," he said.
"I think it's just created this division that will hopefully stop soon because I think it's the best thing for golf too."
