Prosecutors cited the "severity of the charges" and public outrage as the reason for upping his bail from $1m.
Derek Chauvin faces charges of second-degree murder and manslaughter. Three other arresting officers are charged with aiding and abetting murder.
Mr Floyd's death in May led to global protests and calls for police reform.
Mr Chauvin, who is white, knelt on Mr Floyd's neck for almost nine minutes while he was being arrested in Minneapolis on 25 May.
He and the three other police officers have since been fired.
Meanwhile, mourners in Houston, Texas, where Mr Floyd lived before moving to Minneapolis, have been viewing his body, publicly on display for six hours at The Fountain of Praise church.
On Tuesday, a private funeral service will be held in Houston. Memorial services have already been held in Minneapolis and North Carolina, where Mr Floyd was born.
It is believed a family member escorted Mr Floyd's body on a flight to Texas late on Saturday.
Democratic US presidential candidate Joe Biden met privately with Mr Floyd's relatives in Houston to offer his sympathies on Monday.
"He listened, heard their pain, and shared in their woe," said Floyd family spokesman Benjamin Crump, who tweeted a photo of the meeting. "That compassion meant the world to this grieving family."
Aides to the former vice-president said he would also record a video message for Tuesday's service.
What happened at the bail hearing?
Mr Chauvin, a 19-year police veteran, did not enter a plea as he appeared via teleconference on Monday.
He did not speak during the 15-minute hearing, and was handcuffed and wearing an orange jumpsuit as he sat a small table.
Judge Jeannice M Reding set a bail of $1.25m with no preconditions, or $1m with conditions that include Mr Chauvin not contacting Mr Floyd's family, surrendering his firearms and not working in law enforcement or security as he awaits trial.
His lawyer did not object to the bail price.
Mr Chauvin, 44, is currently being held at the Minnesota state prison in Oak Park Heights, after being transferred several times.
His next court appearance is set for 29 June.