The prestigious prize celebrates both literary merit and writers' commitment to promoting peace through their work.
Rushdie's 1988 novel, The Satanic Verses, led to a 1989 call for his death from Iran's Ayatollah Ruhollah Khomeini, forcing him into hiding.
The award, also known as the Ambassador Richard C. Holbrooke Distinguished Achievement Award, is named after the American diplomat who helped architect the 1995 Dayton Peace Accords.