The government also said Friday that GM will report safety issues faster in the future.
The fine is the maximum allowed by law. But it's only a fraction of the $3.8 billion GM made last year. So far, repairing all the recalled cars has cost the automaker $1.5 billion.
The National Highway Traffic Safety Administration has been investigating GM's delayed recall of older small cars with defective ignition switches. The ignition switch recall has been the largest issued by GM this year, and has involved 2.6 million vehicles, including older Chevrolet Cobalt and Saturn Ion models.
GM has recalled 11.2 million vehicles in 24 recalls in the first half of 2014. This week, GM issued another five recalls involving 2.7 million vehicles.
GM has acknowledged knowing about the problem for at least a decade, but it didn't recall the cars until this year. The company says at least 13 people have died in crashes linked to the problem.
The Justice Department also is investigating.