DC Superior Court Judge Neal Kravitz approved the judgement on Friday against Proud Boys members Joseph Biggs, Enrique Tarrio, Jeremy Bertino, and John Turano, as well as the group's LLC.
Judge Kravitz described the incident as "hateful and overtly racist conduct," according to CNN.
The hate group tore down the Metropolitan African Methodist Episcopal Church's Black Lives Matter sign while rallying in Washington DC in 2020.
On 12 December, 2020, individuals dressed in Proud Boys clothing had "leaped over Metropolitan AME's fence, entered the church's property, and went directly to the Black Lives Matter sign," according to Judge Kravitz's order.
"They then broke the zip ties that held the sign in place, tore down the sign, threw it to the ground, and stomped on it while loudly celebrating," Mr Kravitz wrote in his ruling.
"Many others then jumped over the fence onto the church’s property and joined in the celebration of the sign’s destruction.”
He added that the church had "vocally and publicly" supported civil rights and racial justice causes.
“Church leaders and congregants view supporting the Black Lives Matter movement as a continuation of the church’s mission of advocacy for civil rights and racial justice,” he wrote.
The judge also said the Proud Boys had "incited and committed acts of violence against members of Black and African American communities across the country".
"They also have victimized women, Muslims, Jews, immigrants, and other historically marginalized people,” he wrote.
The $1m compensation awarded to the church will be used to repair the sign and increase security in reponse to the attack and "ongoing threats".
Arthur Ago, an attorney representing the church, said the congregation was not looking for a "monetary windfall" but rather wanted to "stop the Proud Boys from being able to act with impunity, without fear of consequences for their actions".
Tarrio, a leader of the Proud Boys, pleaded guilty in July 2021 to property destruction in a criminal case involving the burning of a Black Lives Matter banner at another predominantly Black church in Washington.
Tarrio and Biggs were also among the four Proud Boys found guilty of seditious conspiracy for their roles in the Capitol riot on January 6, 2021.