The 16-year-old is being recognised “for inspiring and amplifying political demands for urgent climate action reflecting scientific facts”, the prize foundation said.
Created in 1980, the annual Right Livelihood Award is an international award to "honour and support those offering practical and exemplary answers to the most urgent challenges facing us today."
The prize was established by German-Swedish philanthropist Jakob von Uexkull and is presented annually in early December.
Thunberg's win, according to judges, was due to the manner in which she “personifies the notion that everyone has the power to create change. Her example has inspired and empowered people from all walks of life to demand political action”.
She has also been nominated for the Nobel Peace Prize.
Previous winners include Bianca Jagger, David Suzuki and the Syrian Civil Defence.
This year's Right Livelihood Award also honours three others, including Sahrawi human rights activist Aminatou Haidar "for her steadfast non-violent action, despite imprisonment and torture, in pursuit of justice and self-determination for the people of Western Sahara".
Lawyer Guo Jianmei received the award for her "pioneering and persistent work" for women's rights in China.
The Brazilian Hutukara Yanomami Association and its leader Davi Kopenawa were also honoured for their "courageous determination to protect the forests and biodiversity of the Amazon and the lands and culture of its indigenous peoples".
The award consists of a cash prize of one million Swedish kronor (€93,000) for each laureate, meant to support the recipient's work.