The National Highway Traffic Safety Administration hit GM with its largest fine ever over a late recall, after the automaker took more than a decade to acknowledge the deadly problem.
"Safety is our top priority, and today's announcement puts all manufacturers on notice that they will be held accountable if they fail to quickly report and address safety-related defects," said US Transportation Secretary Anthony Foxx.
GM will have to undergo what the NHTSA called "unprecedented oversight" of its operations, including opening its files on its internal investigation into the ignition issue.
GM has known of the problem since 2001 but only revealed its concerns in March, despite more than 30 and possibly more than 300 accidents tied to it.
The company could face billions of dollars in civil and criminal liabilities under lawsuits filed against it by car owners.
The NHTSA said the fine was tied to the problem in Chevrolet Cobalts, in which the ignition could suddenly shut of while the car was in motion, turning off electrical systems including the airbags.
It was not clear whether the fine covered other GM car models also recalled this year for the same problem.