The sword given to Grant, who later became the 18th president, was one of the marquee items among the 750 to be auctioned Sunday and Monday by Heritage Auction Galleries of Dallas.
It went for US$1,673,000 (euro1,244,700) to an unnamed bidder.
Lt. Col. George Armstrong Custer's frayed battle flag, which was auctioned for went for US$896,250 (euro666,800), while a "Bonnie Blue" flag carried by the 3rd Texas State Cavalry, made US$47,800 (euro35,600).
The silver-and-gold sword was presented by citizens of Kentucky in 1864 to honor Grant's promotion to General-in-Chief of all Union forces.
It contains a 28-diamond monogram and is covered with intricate designs, including engraved battle scenes on its 33-inch (84-centimeter) blade.
Gary Hendershott, Heritage's director of Civil War auctions, described the sword as maybe the finest from the Civil War period.
"It's really a hallmark of American silversmith craftsmanship," he said.