Yorkshire Wildlife Trust and Yorkshire Dales Rivers Trust have each received £500,000.
The "significant" voluntary payment - known as a "civil sanction" - followed an unauthorised sewage discharge from a sewer outflow at Hookstone Road in Harrogate, which in turn polluted neighbouring Hookstone Beck.
Almost 1,500 fish were killed in the incident on 31 August 2016.
The Environment Agency said water quality was affected on a 1.5-mile downstream stretch of the beck.
Investigating officers traced the pollution to the Hookstone Road overflow, which had been blocked. Yorkshire Water was not alerted due to faulty telemetry equipment.
Following the incident Yorkshire Water submitted an enforcement undertaking to the Environment Agency proposing a charitable donation totalling £1m, which is the largest ever accepted by the EA.
An enforcement undertaking is a voluntary offer made by companies or individuals to make amends for their offending, and usually includes a payment to an environmental charity to carry out environmental improvements in the local area.
Yorkshire Water said a plank of wood "that shouldn't have been in the sewer network" was the initial cause of the incident.
A spokesman added: "We acted quickly to stop the pollution but understand incidents of this kind are distressing and when things go wrong, we understand we have a responsibility to make it right and to prevent these things from happening at all.
"Unfortunately, it has taken seven years to reach an agreement with the Environment Agency to donate funds to local wildlife charities that will directly benefit Yorkshire, but we are pleased to have finally provided funds to the Yorkshire Wildlife Trust and Yorkshire Dales Rivers Trust."
It said it was committed to protecting the environment and that its procedures and processes "have evolved significantly" since 2016, contributing to a halving of pollution incidents in the last five years.
In the aftermath of the Hookstone Beck incident, Yorkshire Water spent £1.85m to improve the sewer network in the area "to prevent repeat issues".
Commenting on the pay-out, Yorkshire Wildlife Trust said nature is "in crisis" and that it firmly believes that polluters causing damage to the environment "must make amends, including through clean-up operations and fines."
It added: "It is crucial that we all take responsibility for the natural world, especially businesses that operate in wild places."
It said the cash will be spent on "new and improved homes for wildlife, mainly on our wetland reserves".
Yorkshire Dales Rivers Trust intends to spend its money to fund improvements on the River Nidd.
Environment Agency area environment manager in Yorkshire, Claire Barrow, said: "This significant £1 million civil sanction will be invested back into the local area to enhance the environment for people and wildlife."
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