The award was established in 2009 by writers' charity English Pen in memory of famous British playwright and Nobel laureate Harold Pinter.
Maureen Freely, chair of the judging panel, said: "This prize is English Pen's way of thanking Salman Rushdie not just for his books and his many years of speaking out for freedom of expression, but also for his countless private acts of kindness.
"When he sees writers unjustly vilified, prosecuted, or forced into exile, he takes a personal interest. I think he would be the first to say that it was Harold Pinter who set the example in this regard: the engaged writer never sleeps."
"It's very moving to receive an award named after my friend Harold Pinter, whose literary genius was matched by his passion for social justice, and to follow in the distinguished footsteps of the previous recipients Tony Harrison, Hanif Kureishi, David Hare, Carol Ann Duffy and Tom Stoppard," Rushdie said.
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"The work of Pen, both in promoting the best of world literature and in opposing abuses of freedom, continues to be vitally important, and I'm proud to have been a part of that effort in England as well as the United States," he added.
His prize will be shared with an "International Writer of Courage", selected by him in association with English Pen's Writers at Risk committee.
Rushdie is best known for his acclaimed novel 'Midnight's Children', for which he won the Booker followed by the one-off Best of Booker in 2008, and the controversial 'The Satanic Verses' - for which he went into hiding in 1989 after it sparked widespread protests by Muslims and a fatwa from Iran's Ayatollah Khomeini.