The loss compares with a $2.2bn (£1.1bn) profit in 2006.
Revenues fell to $181bn (£92.2) during 2007 from $206bn (£105bn) in 2006.
However, GM's worldwide vehicle sales increased 3% to 9.4 million units in 2007, marking the second best year in units sold in the company's 100-year history.
Record sales growth was achieved in Eastern Europe, Latin America and the Asia Pacific region.
Despite the financial performance, GM’s chief Rick Wagoner, remained positive about the company’s outlook. He called 2007 a year of "important progress" with aggressive growth in emerging markets and sweeping cost reductions in its US operations.
He said: "We're pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the US and Germany.
"But we have more work to do to achieve acceptable profitability and positive cash flow.”