The 70-year-old joins the likes of poet Maya Angelou, novelist Toni Morrison and civil rights trailblazer Dolores Huerta, the Los Angeles Times reported.
"These extraordinary honourees come from different backgrounds and different walks of life, but each of them has made a lasting contribution to the life of our nation.
"They've challenged us, they've inspired us, and they've made the world a better place. I look forward to recognising them with this award," Obama said in a statement.
Dylan has been an influential figure in the field of popular music and culture as a poet, singer and songwriter for five decades. He has given hits like "Blowin' in the Wind" and "The Times They Are a-Changin'" .
In his long musical career, Dylan has won almost every major award, including a Commandeur dans l'Ordre des Art et des Lettres, a Pulitzer Prize Special Citation and the 2009 National Medal of Arts. PTI BK