The instrument, which is a left-handed 1969 Fender Mustang in blue, was sold as part of a three-day Music Icons auction by Julien’s Auctions. It was originally expected to fetch between $600,000 and $800,000 (£476,000 to £635,000).
Also up for sale was a 1965 blue Dodge Dart that was owned and driven by Corbain – which also included the car’s original licence plates.
Cobain famously played the guitar in the video for Nirvana’s hit video Smells Like Teen Spirit, and called Fender Mustangs his favourite in a 1991 interview.
“I’m left-handed, and it’s not very easy to find reasonably priced, high-quality left-handed guitars,” he told Guitar World.
“But out of all the guitars in the whole world, the Fender Mustang is my favorite.”
Who’s the lucky new owner? That would be Jim Irsay, the owner of sports team the Indianapolis Colts.
“I am thrilled to preserve and protect another piece of American culture that changed the way we looked at world,” he said after placing the winning bid.
“The fact that a portion of the proceeds will go toward our effort to kick the stigma surrounding mental health makes this acquisition even more special to me.”
The Cobain family will donate some of the proceeds of the sale to the Colts’ campaign Kicking the Stigma, which aims to break the taboo around mental illness.
Before the auction, the guitar was displayed at the Hard Rock Café in London, where fans could see it for free.
In a press statement, Darren Julien, the CEO of Julien’s Auctions, called the guitar’s auction “one of our greatest privileges and most distinguished honours.”
“[It is] one of the most culturally significant and historically important guitars not only of Kurt Cobain and Nirvana’s legacy but in all of rock music history,” he said.
“Rarely do personally owned items from Kurt Cobain with this incredible and unprecedented provenance of his life and career become available for public sale.”
Though Cobain died in 1994, interest in the singer remains high. Last year, one of his self-portraits sold for over $281,000 (£223,000), while six strands of his hair sold for $14,145 (£11,241).