A living legend, the former Anglican archbishop of Cape Town played a pivotal role in the downfall of apartheid, and subsequently worked to heal the wounds and rifts that apartheid left behind.
Tutu, 81, won the Nobel Peace Prize in 1984 for standing up against white minority rule.
He remains a prominent campaigner for peace and human rights.
Established in 1972 by the late American-born investor and philanthropist John Templeton, the annual prize - worth more, in monetary terms, than the Nobel - honours a living person "who has made an exceptional contribution to affirming life's spiritual dimension".
"When you are in a crowd and you stand out from the crowd, it's usually because you are being carried on the shoulders of others," Tutu was quoted in a statement released by the US-based foundation.
"I want to acknowledge all the wonderful people who accepted me as their leader at home and, so too, accept this prize in a representative capacity."
Last year's Templeton Prize went to the Dalai Lama, the Tibetan Buddhist spiritual leader.
Other recent winners include British astrophysicist Martin Rees and Canadian philosopher Charles Taylor.
The foundation, whose first award went to Mother Teresa in 1973, praised Tutu being a moral voice for people around the world.
"Desmond Tutu for calls upon all of us to recognise that each and every human being is unique in all of history and, in doing so, to embrace our own vast potential to be agents for spiritual progress and positive change," it said.
