It is the biggest fine in motor racing history, eclipsing the $1 million meted out to then-champions Ferrari, Michael Schumacher and Rubens Barrichello after the Austrian Grand Prix debacle of 2002.
The furore erupted after Turkish Cypriot leader Mehmet Ali Talat, who was introduced to millions of viewers around the world as the 'President of the Turkish Republic of Northern Cyprus', presented the winner's trophy to Ferrari's Brazilian Felipe Massa at the race in Istanbul.
The sanction, handed down at an extraordinary meeting of the International Automobile Federation (FIA)'s World Motor Sport Council in Paris, will hit organisers heavily in the pocket but at least removed the threat of the race being stripped from next year's calendar.
The National Sporting Authority of Turkey (TOSFED) and the organisers of the Turkish Grand Prix (MSO) were charged with breaking the FIA statutes, the international sporting code and Formula One regulations.
They FIA said in a statement they had been found guilty on all counts and the two organisations fined a combined total of $5 million.
Cyprus has been split since 1974, when Turkish troops invaded the northern part of the Mediterranean island after a brief, Greek-inspired coup. Only Turkey recognises the north.
The FIA, representing 213 national motoring organisations from 125 countries, was concerned that Talat's involvement may have compromised its political neutrality.
Organisers said they invited Talat as "a dignitary of international status" and denied using the podium ceremony to gain political advantage.
The Istanbul Park circuit has been highly praised by drivers and teams after two races there, with some likening it to Belgium's classic Spa track, and they will be relieved to see it remain on the calendar.
"It seems a rather draconian act to take a world championship event off when they've built a good circuit and basically it's a good grand prix," McLaren team boss Ron Dennis had told reporters at Monza earlier this month.