Heritage Auctions says the watch was bought Saturday by a telephone bidder who is remaining anonymous.
The watch was part of a set given to Ruth and his Yankees teammates after they beat their rivals the New York Giants in the 1923 Series.
Another highlight of the auction was a 1911 game-used bat from "Shoeless" Joe Jackson. It sold for $956,000.
Jackson was banned from baseball after he and his Chicago White Sox teammates were accused of fixing the 1919 Series.
The Ruth watch is engraved with a picture of a pitcher, hitter and catcher and a ball in flight.
It is inscribed, "Presented by Baseball Commissioner to George H. Ruth."
