Volkswagen has pleaded guilty to three criminal charges in the US and will pay fines totalling $4.3bn (£3.5bn) to settle charges over the emissions-rigging scandal.
The firm will pay $2.8bn in criminal fines and $1.5bn in civil penalties.
US Attorney-General Loretta Lynch said VW denied and then lied in a bid to cover up its actions.
The fines amounted to one of the biggest clean air penalties ever achieved, she added.
Six VW executives and managers have also been charged over their role in the emissions cheating.
Matthias Müller, Volkswagen Group chief executive, said the German car maker “deeply regrets” its actions.
Hans Dieter Pötsch, chairman of VW’s supervisory board, said: “We are no longer the same company we were 16 months ago.”
The Department of Justice said VW had a long-running scheme to sell about 590,000 diesel vehicles in the US fitted with a defeat device to cheat on emissions tests.
VW will be on probation for three years and be overseen by an independent monitor during that period. It has agreed to co-operate with the DofJ’s investigation and prosecution of six executives involved in the crimes.
The firm is pleading guilty to “participating in a conspiracy to defraud” the US and its American customers, as well as breaking the Clean Air Act by using cheating software in its cars.
VW is also charged with obstruction of justice for destroying documents related to the scheme, and with importing the cars into the US “by means of false statements about the vehicles’ compliance with emissions limits”.
There are still investor and consumer lawsuits pending in Europe.
The $4.3bn fines means that the total costs associated with the emissions cheating scandal are set to exceed the $19.2bn the company has set aside to deal with the issue.
VW has already agreed to a $15bn civil settlement with environmental authorities and car owners in the US.
Analysis: Theo Leggett, business correspondent
Volkswagen has been humiliated by the US authorities – punished for using illegal software to disguise the level of emissions produced by its diesel powered cars. Not only has it been hit with heavy fines, but it has also had to plead guilty to criminal charges and sign up to a ‘Statement of Facts’ – an agreed version of events that sets out exactly what it did wrong.
Taken alongside the $15bn deal to compensate consumers, buy back cars and pay for environmental measures agreed last year, the new fines mean VW will have to pay out $19.3bn in the US alone. That’s more than $32,000 for each of the 600,000 cars sold with defeat device software in the region.
Yet the settlement is actually good news for Volkswagen. It was always going to face a hefty bill for trying to deceive US regulators. Now, at least, it knows how much it will have to pay. It is still facing potentially damaging lawsuits from investors and car buyers in Europe, but a large chunk of the legal uncertainty has now been removed.
However, it looks as though US regulators are far from finished. Six executives are now facing charges over their alleged role in the affair – and prosecutors have already made it clear they believe senior figures were involved in attempts to cover up what was going on.
So the pressure on the company itself may now ease, but it’s likely some individuals will be holding long meetings with their lawyers.
The scandal erupted in September 2015 when the US Environmental Protection Agency (EPA) found that many VW cars sold in America had a “defeat device” – or software – in diesel engines that could detect when they were being tested and adjust the performance accordingly to improve results.
The German car giant subsequently admitted cheating emissions tests in the US and many countries throughout the world, including the UK.
On Monday it emerged that VW executives knew about emissions cheating two months before the scandal broke, but chose not to tell US regulators, according to court papers.
The executives involved include Oliver Schmidt, who headed VW’s US environmental regulatory compliance office from 2012 until March 2015.
He was arrested while on holiday in Florida at the weekend. On Monday he was charged with conspiracy to defraud and has been remanded ahead of a court appearance on Thursday.
He is one of the six executives the DoJ said were being charged for their roles in the “nearly 10-year conspiracy”.
The others include VW brand head of development Hainz-Jakob Neusser and former VW head of engine development Jens Hadler.
“This wasn’t simply the action of some faceless, multinational corporation,” said deputy Attorney-General Sally Yates.
“This conspiracy involved flesh-and-blood individuals who used their positions within Volkswagen to deceive both regulators and consumers.”