Halderman, a producer for CBS' "48 Hours Mystery," had mined information from reading his then-girlfriend's diary entries about her relationship with Letterman, her boss, authorities said.
The Manhattan district attorney's office said the debt-strapped Halderman threatened to ruin Letterman's reputation, disguising his demands as a deal for a thinly veiled screenplay about the comedian.
"In September of 2009, I attempted to extort $2 million from David Letterman by threatening to disclose personal and private information about him, whether true or false," Halderman said in court, reading a prepared statement at first so quickly that Manhattan state Supreme Court Justice Charles Solomon asked him to slow down.
Halderman acknowledged delivering the threat to Letterman's driver, in the form of a screenplay outline, or "treatment."
"This so-called treatment was just a thinly veiled threat to ruin Mr. Letterman if he did not pay me a lot of money," Halderman said, dressed in a gray suit. He subsequently met with Letterman's lawyer, who eventually gave him a phony $2 million check.
"I knew throughout this time that I was not engaged in a legitimate business transaction with Mr. Letterman and that what I was doing was against New York law," Halderman said, adding that he realized he had violated the privacy of Letterman and his family.
"I feel great remorse for what I have done," Halderman said, apologizing to Letterman, the comic's family, and his own former girlfriend, Stephanie Birkett.
Outside court, Halderman repeated his apologies, declined any interviews and said no more. He remains free on bail until his sentencing, set for May 4. In addition to the jail sentence, he agreed to 1,000 hours of community service; he would have faced up to 15 years in prison if convicted at a trial.
Through his lawyers, Letterman thanked Manhattan prosecutors for pursuing the case.
"When they became involved in this case, I had complete faith that a just and appropriate result was inevitable," he said in a statement they read outside court.
Manhattan District Attorney Cyrus R. Vance Jr. noted that Letterman had come to authorities knowing the case could push his private life into public view.
"Mr. Letterman is a public figure, but like all New Yorkers, he has a right to a certain degree of privacy in his public life," said Vance, who took over the case from predecessor Robert Morgenthau in January.
Halderman's lawyer, who had raised free-speech and other issues in his attempt to portray the producer's behavior as a business deal, said Halderman ultimately decided he needed to end the case.
"We had a novel defense here involving complicated legal issues. I was very excited about the defense," said the lawyer, Gerald Shargel. "But there would be a long road ahead of us, and considering the risks and the rewards and the need for Joe to put this behind him and get on with his life, those needs were paramount."
Letterman married longtime girlfriend Regina Lasko last year. They began dating in 1986 and have a 6-year-old son.