Citigroup will pay $4bn to the Department of Justice and $2.5bn for 'consumer relief', which includes investment in affordable housing and mortgage relief.
The settlement stems from the sale of securities made up of sub-prime mortgages, which were at the centre of the 2008 financial crisis.
Citigroup is the second major bank to pay a settlement since an investigation into the loans, after JPMorgan Chase paid $13 billion last year.
According to the US Attorney General, Eric Holder: "under the terms of this settlement, the bank has admitted to its misdeeds in great detail."
He said the settlement "does not absolve Citigroup or its employees from facing any possible criminal charges in the future."
