There's another "I just got a bunch of money, what do I do now?" type post on Hacker News today, and much of the advice is from people who clearly don't know, though the current top comment is actually very good. Since this is a relatively common issue (ha ha) in the startup world, I think it's worth sharing a little of what I've learned from observing others who have this "problem" (yeah, cry me a river, right?). This is somewhat dangerous since money is a very delicate topic for many people, so if you have any strong feelings, please skip this post.
Although today's poster only asked, "What do I do with my money?", there's a second, related question that's also very important, "What do I do with my life?" In both cases, I think the right answer is, "start slow, and avoid making any big decisions now", though as always, there are exceptions.
The money question is the easier of the two to answer: First, don't lose the money!
Many people will naively tell you to immediately hire a financial advisor. What those people don't understand is that the only skill a financial advisor needs in order to be successful is the ability to sell you things. Their actual financial skills are almost irrelevant. Unfortunately, this means that you will need to learn something about money management, and that will take time. Fortunately, you have plenty of time. Read what Warren Buffett has to say about financial helpers. Spend a few years getting recommendations and talking to various advisors before deciding (intermittently, not full-time, of course). Avoid hiring this guy. Meanwhile, put your money in a very safe fixed-income investment, such as short-term CDs. You can circumvent the FDIC insurance limit by having the money spread accross multiple banks (think of it as "RAID for money") -- see CDARS for more info. Don't rush to invest it in the stock market -- that's risky and you could easily lose half of your money in a matter of months. Avoid long-term or illiquid investments, though it's fine to put a few percent into random things such as startups, but understand that you'll probably lose that money, so consider it an educational expense.
Edit: Many people have incorrectly interpreted my advice as, "don't hire a financial advisor". My actual advice is, "don't rush to hire a financial advisor -- just keep things very simple and take time to decide what is right for you." I personally have a bunch of advisors.
Longer term, you'll probably want to diversify into other types of investments. Unfortunately, there's no simple formula for how to do this, and the right answer will depend on your own financial particulars, emotional composition (how does losing money make you feel?), etc. Again though, the most important thing to understand is that you don't need to decide this now. If anyone pressures you to do anything right now (especially financial advisors), tell them that you are not presently interested in their services, only be less polite about it :)
Now for the hard question: What to do with your life?
First, it's important to understand that once you have the basics, happiness comes primarily from healthy social connections and a sense of purpose. If you quit your job and move to a new city where you don't know anyone or have a clear purpose, there's a good chance that you'll end up depressed or even suicidal. So unless your current life is very broken, don't do that. Take it slow.
Many people with jobs have a fantasy about all the amazing things they would do if they didn't need to work. In reality, if they had the drive and commitment to do actually do those things, they wouldn't let a job get in the way. Unfortunately, if given a lot of money, they are much more likely to end up addicted to crack, or even worse, World of Warcraft. (edit, since people are getting offended: there are, as always, exceptions, but the point is that actually doing stuff is about a million times harder than just dreaming about it, which is why 99% of people wouldn't actually do it even if money weren't an issue) If you've been institutionalized your entire life (school, work, etc), it can be very difficult to adjust to life on "the outside".
Again, don't make any drastic changes unless you really need to. Spend time building up new activities, interests, and social connections, especially ones that will give your life a sense of purpose.
Money can also mess with your identity in bad ways. It's important to remember that we're all made of the same shit -- some people are just a little luckier than others. The nice thing about money is that it gives you more freedom, but it can also be a prison if it takes over your identity, makes you fearful, or causes you to cut off connections with the people around you. True freedom comes from the inside anyway -- we're all still slaves to the larger system. (while searching for a story to illustrate this point, I ended up on Epictetus's Wikipedia page -- he seems to have had it about right, so I'll go with that, though The Matrix is also entertaining)
Sometimes, good fortune can also make people feel guilty. But if you find yourself in this situation, you were probably already very lucky (reasonably healthy, intelligent, well educated, etc) -- there's no reason to feel bad about getting slightly more lucky. Your luck is a gift. It's ungrateful to not make the most out of it (and also help others become a little more lucky).
Explore the opportunity. Do something remarkable. Go for a walk in the park. Appreciate the trees.