1. To make peace with someone. It is most likely an earlier version of the phrase "bury the hatchet." Can you please hang up your hatchet and make up with your sister already? I can't take the constant fighting.

2. To take a break from work; to stop working. Hang up your hatchet, buddy, it's lunchtime! It's really time for me to hang up my hatchet and find a new job somewhere else.