Malaysia's HELP University said it awarded the degree in a "simple ceremony" at the North Korean embassy in Kuala Lumpur to build "a bridge to reach the people" under an "education for peace and prosperity" drive.
"I anticipate that it is a matter of time, within the next six years or so, that (North) Korea will engage the world in many constructive ways," said university president Paul Chan in a statement on the university's Facebook page.
The North's official news agency said the economics degree was conferred on October 3 and the North Korean ambassador accepted the certificate.
But the move, which was publicised this week after appearing on a foreign policy blog, has drawn flak from Malaysia's active social media scene.
"So next time I want to promote peace, I should start giving out Nobel peace prize to terrorist? I am so ashamed to have graduated from this institution," one user posted today on the university's Facebook page.
The Kim dynasty has ruled North Korea -- one of the world's poorest countries beset by chronic food shortages -- with an iron fist and a pervasive personality cult for more than six decades.
Jong-Un, grandson of founding leader Kim Il-Sung, took over when his own father Kim Jong-Il died of a heart attack in December 2011.
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