In a strongly worded opinion, Chief Judge Beryl Howell of the US District Court for the District of Columbia said the large award was necessary to punish and deter North Korea for the "torture, hostage-taking, and extrajudicial killing" of Warmbier.
Visiting the country as a tourist, North Korean state media said he was sentenced to 15 years of hard labour for attempting to steal an item bearing a propaganda slogan from his hotel.
The case attracted worldwide attention because of the horrific circumstances of the young man's death, and because Warmbier, a University of Virginia student, was seized by North Korea at a time of escalating tensions with the United States.
His parents say he was tortured.
North Korea did not respond to the lawsuit - Howell's opinion was rendered as a so-called "default judgment" - and the country has no free assets in the USA that the family could make a claim for.
U.S. student Otto Frederick Warmbier, who was arrested for committing hostile acts against North Korea, speaks at a press conference in Pyongyang, Feb. 29, 2016.
"We put ourselves and our family through the ordeal of a lawsuit and public trial because we promised Otto that we will never rest until we have justice for him", they said in a joint statement.
North Korean officials alleged he conspired with an OH church, along with the Central Intelligence Agency, the motion states.
North Korean officials detained Warmbier in 2016 as he tried to leave the country after spending five days there on a commercial tour.
The arrest and death of Warmbier came during a time of heightened tension between the US and North Korea over the isolated country's nuclear weapons program.
An American court has ruled that the family of Otto Warmbier are owed in excess of $500 million by the North Korean government.
Despite their decades-long hostilities, the US and North Korea have sought to establish peace on the Korean Peninsula in an unprecedented dialogue led by Trump and Kim, who has vowed to work alongside the Republican leader in pursuit of denuclearizing the peninsula. "Indeed, North Korea is the world's "leading" and 'best qualified candidate for indictment" at the International Criminal Court for crimes against humanity".
The court's memorandum opinion details Warmbier's condition when he was returned to the U.S.by North Korean authorities.
The complaint also said Warmbier was pressed to make a televised confession, then convicted of subversion after a short trial.
Earlier Trump has insisted Warmbier did not die in vain and his death helped initiate a process that led to a historic meeting this year with Kim Jong Un.
Foreign countries generally have immunity from lawsuits in US courts, but Howell noted that an exception for terrorism applied, given the "barbaric mistreatment" of Warmbier. "There's nothing more evil than North Korea", Cindy Warmbier said in court Wednesday, according to CNN.