David Coleman Headley could have been sentenced to death if convicted of the attack that killed 166 people, including six Americans, but the 49-year-old's plea agreement with federal prosecutors Thursday ruled out the death penalty, provided that he cooperates with the government's terrorism investigations.
The government also agreed not to extradite him to India or Denmark.
Headley's cooperation could include testimony against Chicago businessman Tahawwur Rana, who is a co-defendant in the case.
"Today's guilty plea is a crucial step forward in our efforts to achieve justice for the more than 160 people who lost their lives in the Mumbai terrorist attacks," said U.S. Attorney General Eric Holder.
Rana has pleaded not guilty to conspiracy to provide material support to terrorism.
Prosecutors said Headley scouted out Mumbai prior to the attack and also planned to attack a Danish newspaper whose cartoons offended many Muslims.