Nate D. Sanders Auctions spokesman Sam Heller said bidders from around the world, including the magician David Copperfield, vied for the Oscar.
The 1942 Oscar was thought to be lost for decades. It surfaced in 1994 when cinematographer Gary Graver tried to sell it. The sale was stopped by Beatrice Welles, Orson's youngest daughter and sole heir.
Copperfield, who was outbid in the auction, said he admires Welles not only for his cinematic successes, but because he, too, was a magician. Welles hosted Copperfield's first television special.
The auction house declined to release the highest bidder's name. It said only a handful of Academy Awards have sold for nearly a million dollars.
Michael Jackson paid $1.54 million in 1999 for the best picture Oscar awarded to David O. Selznick for "Gone With The Wind."
Citizen Kane is widely touted as one of the greatest films of all time.
It was the first movie by Welles, who bucked studio and storytelling conventions to craft a landmark film about the rise and fall of a William Randolph Hearst-like newspaper publisher.
The film, released in 1941, was ahead of its time, a dark tale whose brooding design, murky lighting, overlapping dialogue and ripped-from-true-life Hearst connection created an unnerving sense of realism.
