Rowling said she was honored.
"Edinburgh is very much home for me and is the place where Harry evolved over seven books and many, many hours of writing in its cafes," Rowling said. "So much has happened to me both professionally and personally since I moved here nearly 15 years ago, that to receive this recognition is particularly meaningful and special."
Edinburgh's ceremonial head, Lord Provost George Grubb, said Rowling was "a tremendous asset to the city, not least for her writing prowess but also for her philanthropy and the vast amount of support she gives to numerous charities."
Last year's Edinburgh Award went to crime writer Ian Rankin.