Moneo is one of five winners of the award, which recognises individuals that have excelled in fields not currently recognised by the Nobel Prize: painting, sculpture, architecture, music and theatre/film.
The architect – best-known for projects including the Logrono Town Square in northern Spain and Atocha Station in Madrid – was selected in recognition of his "beautifully designed structures" that "complement their settings while establishing unique identities".
"Spanish architect Rafael Moneo is greatly admired for his design approach, which involves looking at the specific conditions of each location to ensure that his buildings blend effortlessly into the city landscape while at the same time respecting the environment, and establishing a clear identity and a connection to his creative vision," said the prize organisers.
Moneo, 80, was born in Tudela, Navarra, but studied architecture in Madrid, obtaining his degree in 1961. He briefly worked for Sydney Opera House architect Jørn Utzon in Denmark, before being granted a fellowship to study at the Academy of Spain in Rome.
He has since worked on projects both home and abroad, including the Cathedral of Our Lady of the Angels in Los Angeles and the Prado Museum Extension in Madrid, and has already been awarded the Pritzker Prize (1996) and the RIBA Royal Gold Medal (2003).
Current projects include a pair of luxury condo towers for the Miami waterfront.
The other five winners of this year's Praemium Imperiale are Latvian dancer Mikhail Baryshnikov, Senegalese musician Youssou N'Dour, Iranian visual artist Shirin Neshat and Ghanaian sculptor El Anatsui.
Each laureate will be given their award at a ceremony in Tokyo on 18 October 2017, in the form of a gold medal and a testimonial letter. They will also each receive ¥15 million, which is approximately £103,000 or $136,000.
Past architecture laureates have included Steven Holl, David Chipperfield and Henning Larsen. Last year the prize went to Brazilian architect Paulo Mendes da Rocha.