J Sasikumar, who holds a record for directing as many as 141 films, is known for his box-office hits of the 1960s and 70s, most of them featuring Kerala's "ever green" hero Premnazir in the lead role.
The award, instituted in memory of father of Malayalam cinema J C Daniel, was announced by minister for cinema K B Ganesh Kumar here.
The annual award, given for outstanding contributions to Malayalam cinema, carries a purse of Rs 1 lakh, citiation and memento.
The selection was made by a jury headed by music director M K Arjunan.
Expressing happiness for being chosen for the honour, Sasikumar said he was dedicating the award to the memory of Premnazir, who showered on him brotherly affection inside and outside the film world.