Targethas agreed to pay a $600,000 civil penalty for importing and selling a variety of toys with high levels of lead paint on the surface.
The lead content of some of the toys' surface coatings were higher than is legally allowed by the 1978 lead paint ban, according to government safety officials.
Lead is toxic if ingested by young children.
The Consumer Product Safety Commission alleged that Target knowingly imported and sold the illegal Chinese-made toys between May 2006 and August 2007.
Target recalled more than 500,000 Kool Toyz play sets, Anima Bamboo Collection games, and Happy Giddy gardening tools and Sunny Patch chairs for lead paint violations between November 2006 and September 2007.
The company did not take the proper steps to ensure none of the toys it imported and sold contained lead paint, according to CPSC.
As part of the settlement, Target denies that it knowingly broke the law.
The agency says the Target settlement makes fiscal year 2009 a record for both number of civil penalties, 39, and dollar value of fines imposed, approximately $9.8 million.
"This penalty should remind importers and retailers that they have always had the same obligation to meet the strict lead limits as the manufacturers," CPSC Chair Inez Tenenbaum said in a statement.