The 3,500-year-old tablet, from what is now Iraq, bears text from the Epic of Gilgamesh – one of the world’s oldest works of literature.
Officials say it was illegally imported before being purchased by the Christian-owned brand Hobby Lobby.
The rare item was bought to be put on display at the Museum of the Bible.
The Washington DC museum, chaired and funded by the craft retailer’s evangelical president Steve Green, has been plagued by controversies involving its collection.
Officials said the tablet was purchased by a US antiquities dealer in 2003 in London, who then shipped it to the US without declaring the contents and sold it on with false documentation.
After changing hands several times, the tablet was eventually bought by Hobby Lobby from an auction house for more than $1.67m (£1.2m) in 2014.
It was seized from the museum by US agents in 2019.
Acting US Attorney for the Eastern District of New York, Jacquelyn M Kasulis, described the legal development as “an important milestone on the path to returning this rare and ancient masterpiece of world literature to its country of origin”.
Hobby Lobby consented to the forfeiture, officials said in a statement on Tuesday.
Known as the Gilgamesh Dream Tablet, the artefact features sections of the Sumerian poem – parts of which mirror stories from the Old Testament – in cuneiform script.
Hobby Lobby was previously fined $3m dollars and forced to hand over thousands of other ancient artefacts.
Mr Green previously blamed his naivety for the errors involving item provenance and said he knew “little of the world of collecting” when he started to purchase antiquities.
On Wednesday, Iraqi Culture Minister Hassan Nazim announced that the US had agreed to return 17,000 looted artefacts, most of them dating back to the same era as the Gilgamesh Dream Tablet.
They will be transported on the plane of Iraqi Prime Minister Mustafa al-Kadhimi, who met President Joe Biden at the White House earlier this week.
Mr Nazim described the recovery of the antiquities as a “great event” and expressed hope that in the near future Iraq would be able to recover other treasures, particularly those in Europe.