Nate Dogg's Wife Throws In the Towel on Nasty Estate Battle

Nate Dogg's kids are jumping for joy -- all because their stepmom and grandmother called it quits on their highly contested battle to control the late rapper's estate ... TMZ has learned.

We broke the story ... Dogg didn't leave a will when he passed, so his wife LaToya Calvin took charge of his estate and then filed docs in August asking Nate's mom, Ruth Homes, be appointed as her co-administrator.

The move didn't sit well with Nate's kids, who were royally pissed. They believed the women were only in it for selfish, money-grubbing reasons and had no intention of dividing the goods fairly.

According to court docs, LaToya withdrew her petition for control earlier this month, and her lawyer tells TMZ, "Nate's children wanted a 'professional administration' and Ruth and LaToya decided to withdraw to avoid conflict with the children."

Sources close to Nate's kids tell us they are "ecstatic."