On The Road is the poignant story of friendship and four trips across America, and - legend has it - was written in a spontaneous burst of energy which Mr Kerouac believed was a new form of writing.
The 36m (120-foot) scroll was bought by James Irsay, the owner of the Indianapolis Colts football team.
The final price - $2.2m (£1.5m) plus a buyer's premium of $226,000 (£158,666) - breaks the previous record paid for a literary work, $1.98m (£1.4m) for a 1920 copy of Franz Kafka's The Trial.
The manuscript of the cult classic was being sold at Christie's by the brother of Kerouac's third wife to pay inheritance taxes.
Mr Irsay is considering taking the manuscript on a road trip mirroring the one described in the novel.
"I look on it as a stewardship. I don't believe you own anything. In this world, it's dust to dust," he said.
The manuscript is pasted together in sections with the seams later reinforced with tape.
Road trip
In the run up to the auction, the manuscript had been on show at cities across the US, including San Francisco, considered to be the spiritual home of Mr Kerouac and the beat poets.
Mr Kerouac himself told Allen Ginsberg that the unravelled manuscript "looks like a road".
The sale comes 50 years after the book was completed, on 22 April 1951.
On The Road is the poignant story of friendship and four trips across America, and - legend has it - was written in a spontaneous burst of energy which Mr Kerouac believed was a new form of writing.
Christie's manuscript expert Chris Coover said: "It's Kerouac's most important book, the book that most people who read any Kerouac read.
"It's his first book in the breakthrough new style, spontaneous prose, which he invented with his scroll, and it's the original form of what has become one of the most influential books of the latter part of the 20th century."
Historian Douglas Brinkley says the manuscript is important partly because it uses the real names of Mr Kerouac's travelling companions, not the pseudonyms used in the published book.
'Free-spirited'
The book is regarded as one of the key texts of the Beat generation, and has sold nearly 3.5 million copies in the United States alone and continues to sell more than 100,000 copies a year.
Writer and critic Herbert Gold, who went to college with Mr Kerouac, said he was not an innovator.
"He thought he was an innovator, but there were writers, going back to Mark Twain and in contemporary times, William Saroyan, who dealt in the American language in a free-spirited way."
Author Truman Capote famously dismissed On the Road as "typing, not writing".
It took Mr Kerouac six years to find a publisher for his manuscript but now the scroll is regarded as an important piece of American literary history.