Murcutt, who was described in the citation as an "architect ahead of his time", became the first Australian to win the Praemium Imperiale.
Awarded annually, the global arts prize recognises laureates in "fields of achievement not covered by the Nobel Prizes", with winners chosen in architecture, painting, music and sculpture this year all receiving five million yen (£100,000).
Last year's awards were cancelled due to the coronavirus pandemic.
"Glenn Murcutt is an architect ahead of his time – an architect who has spent his career creating modest, environmentally responsible buildings rooted in the climate and tradition of his native Australia," said the Praemium Imperiale citation.
"Echoing the Aboriginal phrase 'touch the land lightly', his architecture has a poetic beauty and lightness, in harmony with nature, while at the same time the rationality of modernist architecture and ecological wisdom shine through."
Born in London to Australian parents in 1936, Murcutt moved to Australia aged five.
He studied architecture at the Sydney Technical College and established his studio in 1969 before designing a series of houses across Australia, including a pavilion-like house in Wahroonga in 1962 and Marie Short House, which was built in 1974.
Murcutt often operates alone and without relying on computer software.
"He works primarily as a solo practitioner, allowing him to create 'uncompromising work'," said the citation.
"He also prefers to work without computers, drawing freehand, finding solutions to design issues instinctively," the statement continued.
"As he says, he is not a creator but a discoverer, adding: 'Every great building is already there but to be discovered. It is not created'."
Recent projects by Murcutt include the Australian Islamic Centre in Melbourne and the Arthur and Yvonne Boyd Education Centre complex in West Cambewarra.
Murcutt also designed the sixth iteration of the MPavilion, a temporary structure with a slender, translucent roof.
Alongside Murcutt, American cellist Yo-Yo Ma won this year's Praemium Imperiale for music while Brazilian photographer Sebastião Salgado was awarded in painting and American artist James Turrell in sculpture.
The last Praemium Imperiale in architecture was won by American duo Tod Williams and Billie Tsien in 2019. Previous architecture laureates include Frank Gehry, Renzo Piano, Richard Rogers, Jean Nouvel, Norman Foster, Rem Koolhaas and Zaha Hadid.
Photography is by Anthony Browell.