The Southampton pub had been threatened with legal action by the Saul Zaentz Company (SZC), which owns the merchandising rights for the Lord of the Rings trilogy and The Hobbit, if it did not change its name.
The pub has traded as The Hobbit for more than 20 years and features Lord of the Rings-themed cocktails and interior artwork.
Fry and McKellen, who both star in the upcoming Hobbit film, criticised the Saul Zaentz Company, with Fry calling the threat "pointless, self-defeating bullying".
SZC has since backed down from the threat of legal action, instead offering to grant the pub a licence to use the name for a $US100 annual fee.
A message on the Save The Hobbit Facebook page from staff at the pub says the Hobbit actors have stepped in to pay the licence fee.
"Stephen Fry and Ian McKellen will be visiting the Hobbit Pub sometime after filming is completed and they have even offered to pay for the licence fee," the message said.
Fry also tweeted at the weekend: "Ian McKellen and I v pleased that The Hobbit pub appears to be safe. Between his FB and my tweet I hope we helped common sense prevail."
Filming of The Hobbit is currently under way in New Zealand.
