The prize foundation said Wednesday it was awarding the Canadian its Letters prize, praising him as one of the most influential authors of modern times.
The foundations said "his poems and songs explore with depth and beauty the major questions concerning humanity."
Cohen, 76, is famous for songs such as "Suzanne" and "So Long, Marianne."
The award is one of eight the foundation gives each year. They range from the arts and humanities to scientific research.
The prizes are presented by Crown Prince Felipe in the northern city of Oviedo, capital of the Asturias region.