He has been in detention since January on drugs charges.
The 60,000-euro ($67,000) prize "is a recognition of the work he and Memorial are doing," said Liliane Maury Pasquier, president of the Parliamentary Assembly of the Council of Europe, in a statement.
"It is also a message to all those who work in this region to affirm the principles of the rule of law and human rights."
Set up in 1989, Memorial is the oldest existing Russian non-governmental organisation for human rights.
Its former top representative in Chechnya, Natalia Estemirova, was murdered in 2009.
Titiev, 61, has long reported on abuses by local authorities in the region. He was arrested in January after police claimed to have found drugs in his car. He is currently on trial and faces a jail sentence of up to 10 years if found guilty.
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