The settlement, which includes a record fine of £160 million from the UK's Financial Services Authority, is far larger than the total of £290 million paid by Barclays for Libor manipulation this summer.
The Zurich-based bank, which has around 6,500 staff in London, has endured a turbulent year after the jailing of rogue trader Kweku Adoboli.
The FSA said the misconduct was "extensive and widespread" as UBS's traders routinely made requests to colleagues responsible for determining Libor and Euribor submissions in an effort to benefit their own trading positions.
It said that at least 45 individuals including traders, managers and senior managers were involved in, or aware of, the practice. The regulator recorded at least 2,000 requests for inappropriate submissions and said many more would have been made orally.
Tracey McDermott, FSA director of enforcement and financial crime, said: "They manipulated UBS's submissions in order to benefit their own positions and to protect UBS's reputation, showing a total disregard for the millions of market participants around the world who were also affected by Libor and Euribor."
As well as the FSA, the US Department of Justice and UBS's main Swiss supervisor were among those involved in today's settlement.
Libor is the umbrella term for benchmark rates that underpin the terms of 500 trillion US dollars of contracts from mortgages to the cost of corporate lending.
The probe, which has embroiled about 20 financial institutions, has accelerated with the first arrests by the Serious Fraud Office taking place last week.
Taxpayer-backed Royal Bank of Scotland has previously said it hopes to settle any claims over Libor manipulation soon and warned that potential penalties could be significant.