State Justice Theodore Jones leveled the sanction against the Transport Workers Union for violating a state law that bars public employees from going on strike.
Attorneys for the city and state had asked Jones to hit the union with a "very potent fine" for defying the law.
"This is a very, very sad day in the history of labor relations for New York City," the judge said in imposing the fine.
The union vowed to immediately appeal, calling it an excessive fine.
The heavy penalty could force the union off the picket lines and back on the job. Its 33,000 members are already facing individual fines of two days' pay for every day they are on strike.
The courtroom drama came midway through a day in which the walkout fell far short of the all-out chaos that many had feared.
The nation's largest transit system ground to a halt after 3 a.m. when the Transport Workers Union called the strike after a late round of negotiations with the Metropolitan Transportation Authority broke down Monday night. The subways and buses provide more than 7 million rides per day.
New Yorkers car-pooled, shared taxis, rode bicycles, roller-skated or walked in the freezing cold. Early morning temperatures were in the 20s.
Mayor Michael Bloomberg, who had said the strike would cost the city as much as $400 million a day, joined the throngs of people crossing the Brooklyn Bridge by foot.
"It's a form of terrorism, if you ask me," said Maria Negron, who walked across the bridge. "I hope they go back to work."
With special traffic rules in place, the city survived the morning rush without the monumental gridlock some had feared. Manhattan streets were unusually quiet; some commuters just stayed home.
Public officials carried out their threat of quick legal action, heading into a courtroom in Brooklyn to obtain sanctions against the union.
The striking workers deserve a "very potent fine" because of the walkout's economic and social cost, James Henly of the state attorney general's office said in court. But union attorney Arthur Schwartz accused the MTA of provoking the strike.
Gov. George Pataki said the union acted illegally and "will suffer the consequences."
No talks between the two sides were scheduled by Tuesday afternoon, though a union lawyer told a court hearing that his side was willing to sit down with a mediator.
It was New York's first citywide transit walkout since an 11-day strike in 1980. The main sticking points were pay raises and pension and health benefits.
"I'm not happy about this," said Yvette Vigo, whose teeth were chattering after she walked a couple of miles to pick up a company-run shuttle bus at Wall Street. "It's too cold to walk this far."
At one subway booth, a handwritten sign read: "Strike in Effect. Station Closed. Happy Holidays!!!!"
Huge lines formed at ticket booths for the commuter railroads that stayed in operation, and Manhattan-bound traffic backed up at many bridges and tunnels as police turned away cars with fewer than four people.
Transit workers took to the picket lines with signs that read: "We Move NY. Respect Us!"
"I think they all should get fired," said Eddie Goncalves, a doorman trying to get home after his overnight shift. He said he expected to spend an extra $30 per day in cab and train fares.
"It doesn't seem right to tie up the cultural and investment center of the world," said Larry Scarinzi, 72, a retired engineer from Whippany, N.J., waiting for a cab outside Penn Station. "They're breaking the law. They're tearing the heart out of the nation's economy."
The mayor put into effect a sweeping emergency plan, including the requirement that cars entering Manhattan below 96th Street have at least four occupants.
The union said the latest MTA offer included annual raises of 3 percent, 4 percent and 3.5 percent. MTA workers typically earn from $35,000 as a starting salary to about $55,000 annually. The union said it wanted a better offer, especially since the MTA has a $1 billion surplus this year.
The contract expired Friday at midnight, but the two sides had continued talking through the weekend.
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A VERY STUPID MOVE, don't ya think? Not that I live in NYC, but the strike is STILL stupid.
