The draft of "The Watsons" sold for 993,250 pounds in London, which amounts to $1.601 million. The price includes a buyer's premium.
Auction officials said the document was sold to an anonymous buyer after a lengthy four-way bidding war in the salesroom.
The incomplete work is the earliest surviving manuscript for a novel by Austen, probably written in 1804 but not published in Austen's lifetime. Austen died in 1817 at age 41.
The story centers around a family of four sisters, the daughters of a widowed clergyman.
Sotheby's books specialist Gabriel Heaton said the heavily corrected draft "has afforded an extremely broad audience an insight into the author's writing process and re-workings."
Sotheby's said it is the only major manuscript by the author still in private hands.
Six Austen novels were published, including "Pride and Prejudice," but none of the original manuscripts survives.
The Associated Press contributed to this report.