Federal safety regulators announced the settlement Friday.
It is the maximum GM can be fined for a single violation.
The automaker has admitted that its employees knew of problems with the ignition switch as early as 2004. But the company did not start recalling the 2.6 million cars affected until February.
The flaw caused some cars to shut off while driving, disabling airbags, anti-lock brakes and power steering.
As part of the deal, the automaker has agreed to make changes to its internal safety practices.
A senior law-enforcement official told CNN that General Motors could still face additional fines from a separate FBI probe.