The 57-year-old philosopher and activist has been recognised for her work on the empowerment of women in developing countries, her advocacy of the human rights of small farming communities, and her scientific analysis of environmental sustainability.
Dr Shiva will give the City of Sydney Peace Prize lecture at Sydney Opera House on November 3, and will be presented with the prize on the evening of November 4.
Speaking from her hometown of Delhi, Dr Shiva said she was honoured to receive the award.
"The protection of biodiversity, support for women in agriculture and for all subsistence farmers are human rights issues which I'll address in Sydney," Dr Shiva said.
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Sydney Peace Foundation director, Professor Stuart Rees, said Dr Shiva was an inspiring recipient of the award.
"Many communities are threatened by the consequences of global warming, yet in Australia the movement to address this issue has gone to sleep," he said.
"Vandana's presence in Sydney in November should wake them up."
Other distinguished recipients of Australia's only international prize for peace have included previous Nobel recipients Professor Muhammad Yunus and Archbishop Desmond Tutu, former UN High Commissioner for Human Rights Mary Robinson, Aboriginal leader Patrick Dodson, and journalist John Pilger.
Mary Kostakidis, chair of the Sydney Peace Foundation, said governments around the world sought Dr Shiva's counsel on issues of sustainable development.
"Vandana Shiva's work highlights the fundamental connection between human rights and the protection of the environment," Ms Kostakidis said.
"She offers solutions to some of the most critical problems posed by the effects of globalisation and climate change on the poorest and most populous nations."
