The coin, one of five known to exist, had been stored away for 41 years because its owner had been told, erroneously as it turned out, it was not authentic.
Melva Givens, of Salem, Va., inherited the coin from George O. Walton, who was killed in a car crash in 1962. Walton, a North Carolina collector, had acquired it in the mid-1940s for a reported $3,750, Heritage Auctions, which conducted the Thursday sale, said in a news release.
Todd Imhof, executive vice president of Heritage Auctions, said the coin was found after a nationwide search and was authenticated "by experts in a secret midnight meeting Baltimore in 2003."
Melva Givens had "kept the nickel in a box with family items in the closet, and it stayed there for four decades," said her nephew, Ryan Givens -- who consigned the coin to Heritage Auctions with his two sisters and his brother.
Ryan Givens and his siblings took it to the American Numismatic Association World's Fair of Money in Baltimore after a $1 million reward was offered.
"This is one of the greatest coins at that price range," said Jeff Garrett, of Lexington, Ky., who bought the coin in partnership with Larry Lee of Panama City, Fla.