The Game & Young Thug -- Beef Squashed ... A Capone Saves the Day

The Game and Young Thug put an end to their beef before anyone got shot ... and the truce was put together by a mutual friend ... with some major street cred.

Rapper JoJo Capone tells TMZ he brokered peace between Game and Thug late Wednesday ... after they'd traded some serious threats. Capone tells TMZ ... Game reached out to him after seeing a photo online of Capone and Thug together. He says Game didn't realize Capone was down with Thug ... and that opened the door to a summit.

Capone says he got Game and Thug on the phone and explained ... they both needed to get back to making music, and not threats. Capone says he told them they needed to look at the big picture and call off the dogs before someone got hurt.

They got the message. Shortly after the call, Game confirmed the war is over.