The 70-year-old star, who is the longest-running host of late-night TV, is the 20th humorist to receive the prize, which began in 1998, according to The Hollywood Reporter.
"This is an exciting honour. For 33 years, there was no better guest, no greater friend of the show, than Mark Twain. The guy could really tell a story," Letterman said in a statement.
The Twain prize is given annually to a humorist whose impact on American society is reminiscent of Samuel Clemens, the 19th-Century novelist, satirist and social commentator better known as Mark Twain.
Deborah F Rutter, the president of the Kennedy Center, said in a statement: "For decades, David Letterman delivered comedy to America that was smart, authentic and, frankly, what many of us came to rely upon to elevate our spirits after a long day. Raise your hand if, like me, you shifted your bedtime because you didn't want to miss a moment of Dave on television lest you not be part of the conversation with friends and co-workers the next day."
Previous winners of the Mark Twain Prize include Bill Murray, Eddie Murphy, Jay Leno, Carol Burnett and Ellen DeGeneres.
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