Girl With Balloon, one of Banksy's most widely recognised works, was auctioned by Sotheby's in London on Friday night.
The framed, stencil spray painting shows a girl reaching towards a heart-shaped balloon and had been the final piece sold, equalling Banksy's previous auction record of £1.04 million.
However, in a twist to be expected from street art's most subversive character, the canvas suddenly passed through a shredder installed in the frame.
Posting a picture of the moment on Instagram, Banksy wrote: "Going, going, gone..."
The 2006 piece was shown dangling in pieces from the bottom of the frame.
"It appears we just got Banksy-ed," said Alex Branczik, Sotheby's senior director and head of contemporary art in Europe.
Banksy is a Bristol-born artist whose true identity - despite rampant speculation - has never been officially revealed.
He came to prominence through a series of graffiti pieces that appeared on buildings across the country, marked by deeply satirical undertones.
Friday's self-destruction was the latest in a long history of anti-establishment statements by the street artist.
Other recent works included the opening of Dismaland, his dystopian, Disneyland-esque theme park in 2015, which he described as a "family theme park unsuitable for children".
Girl With Balloon appeared on a wall in Great Eastern Street, London.
The gallery version featured spray paint and acrylic on canvas, mounted on a board.