The boxy black leather Asprey bag, owned by the former British prime minister for more than 30 years, was sold to a private buyer.
The bag was on Thatcher's arm during Cold War negotiations with U.S. President Ronald Reagan and Soviet Union leader Mikhail Gorbachev.
"The handbag makes you automatically think of Margaret Thatcher," said former politician and author Jeffrey Archer, who hosted the auction. "Someone has captured this and will have, frankly, a historic document for the rest of their lives."
The Telgraph provides a brief video:
Thatcher, one of the most formidable and well-known British Conservative leaders, was famously responsible as the origins of the word "handbagging," which referred to her uncompromising style.
Her daughter Carol, who attended Monday's event, said her mother was "longing to know" how much the bag raised. Christie's said Thatcher will donate the proceeds to a British charity for people with a genetic skin condition.
"I hope that the highest bidder knows that if he's into handbagging, he's got a weapon with quite a track record," Carol Thatcher said.
The Telegraph provides a brief video about Maggie's famous handbag: