Patti Smith will share the honor, which is handed out by the Royal Swedish Academy of Music, with the Kronos Quartet.
The prize committee which selected Smith insisted that "by devoting her life to art in all its forms, Patti Smith has demonstrated how much rock 'n' roll there is in poetry and how much poetry there is in rock 'n' roll".
The judges added that the 64 year old "has transformed the way an entire generation looks, thinks, and dreams".
Both Smith and the string quartet will be invited to a ceremony in Stockholm later this year to accept the prize of one million kronor ($166,000/GBP103,000).
The Polar Music Prize, which was founded by ABBA's former manager Stig Anderson in 1989, is shared annually by a pop artist and a classical musician. Last year, it was awarded to Icelandic singer Bjork and Italian composer Ennio Morricone.