In Toronto, provincial Attorney General Chris Bentley announced Steven Truscott, 62, would receive the damages and his wife would receive $100,000.
Truscott was charged with the rape and killing of 12-year-old Lynne Harper near a Canadian air force base in Ontario in 1959. He was sentenced to hang when he was 14 but was cleared last August by the Ontario Court of Appeal.
In a prepared statement, Bentley expressed sympathies to all involved.
"I hope that Mr. Truscott and his family will now have the opportunity to move forward with their lives," Bentley said. "My thoughts are also with the family of Lynne Harper, who will continue to live with the tragedy of their loss forever."
Harper's killer was never found.
Truscott's appeals spared his life and Canada abolished capital punishment in 1976. He served 10 years in prison followed by almost 40 years of parole before being exonerated, the Canwest News Service said.