Street Musicians depicts Lowry's trademark matchstick figures and dogs in Shore Street, Thurso.
The artist painted the rare Scottish scene in his Manchester studio in 1938, after visiting the town some years previously. The masterpiece went under the hammer at Sotheby's in London, where it was sold to an anonymous telephone bidder for just over its pre-sale estimate of £600,000 to £800,000.
The painting was the first picture bought by the collector AJ Thompson in 1982. He sold his entire group of 15 paintings by the artist for £15,240,500.
The highest sum was made by an iconic picture of London's Piccadilly Circus, which reached £5,122,500. A Town Square, showing people and dogs in an industrial town, made £2,490,500, while another industrial scene, A River Bank, fetched £1.986,500.
Other paintings sold included a rare scene of Market Place at Berwick-upon-Tweed.
Lowry had travelled around Britain during the 1930s, reaching Thurso, where he sketched scenes before taking them back south of the Border to paint.