The deal, which is subject to a federal judge's approval, would mean that the Justice Department will not pursue further action against the company for its role in the disaster.
The agreement calls for Transocean to implement a series of operational safety and emergency response improvements on its rigs.
Transocean said in a statement that it believes the settlement is in the best interest of its shareholders and employees.
"This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon," the company said.
Transocean owned the Deepwater Horizon rig, which exploded off Louisiana on April 20, 2010, killing 11 workers and spewing more than 200 million gallons of oil from an undersea well belonging to the British oil company BP.
The oil leak has been described as the worst environmental disaster in the US history.
Transocean Deepwater Ltd. has agreed to pay USD 1.4 billion in civil and criminal fines and penalties for its role in the 2010 Deepwater Horizon disaster in the Gulf of Mexico.
The US Justice Department issued a statement on Thursday, saying that the drilling rig operator had agreed to plead guilty to violating the Clean Water Act and pay the fines and penalties, AFP reported.
The statement added that the Switzerland-based company would pay USD 400 million in fines, as well as USD one billion in civil penalties for violations of the Clean Water Act.
"Transocean's agreement to plead guilty to a federal crime, and to pay a total of USD 1.4 billion in criminal and civil penalties, appropriately reflects its role in the Deepwater Horizon disaster," Attorney General Eric Holder said in a statement.
In pleading guilty, the firm admitted that its rig crew was "negligent in failing fully to investigate clear indications that the Macondo well was not secure and that oil and gas were flowing into the well."