Straus was a Bavaria-born American businessman, politician, and co-owner of Macy's department store in New York.
On the night of the sinking, it is believed his devoted wife refused a place in a lifeboat as she did not want to leave her husband and said she would rather die by his side.
The body of Ida Straus was never found.
A letter written by Mrs Straus on Titanic stationery and posted while she was onboard the ship, which was built in Belfast, fetched £100,000 at the auction.
A Titanic passenger list was purchased for £104,000 (Sh17,558,184) and a gold medal awarded to the crew of the RMS Carpathia by rescued survivors sold for £86,000 (Sh14,519,268).
The auction of Titanic-related memorabilia reached £3m (Sh506,486,100) in total.
The pocket watch stopped at 02:20, the moment the Titanic disappeared beneath the waves.
It is believed to have been a 43rd birthday gift from Ida Straus to her husband in 1888 and is engraved with Straus' initials.
It was returned to his family and was passed down through generations before Kenneth Hollister Straus, Isidor's great-grandson, had the movement repaired and restored.
Auctioneer Andrew Aldridge said "the world record price" for the watch "illustrates the enduring interest in the Titanic story".
"Every man, woman and child passenger or crew had a story to tell and they are told 113 years later through the memorabilia," he added.
"The Strauses were the ultimate love story, Ida refusing to leave her husband of 41 years as the Titanic sank, and this world record price is testament to the respect that they are held in."
A gold pocket watch presented to the captain of the Carpathia, the steamship which rescued more than 700 Titanic survivors, sold last year for a then record-breaking £1.56m (Sh263,372,772).