The 56-year-old American was awarded the prize by the city of Frankfurt for her work as a one of the most important politically-engaged thinkers of her time.
Her works "can hardly be overestimated," Frankfurt's culture policy spokesman Felix Semmelroth said as he introduced Butler, the first woman to receive the prestigious intellectual prize, worth €50,000.
Butler has been heavily criticized by Jewish groups for her critical opinions of Israeli government policy, but she did not address the issue in her acceptance speech.
The Central Council of Jews in Germany had called Butler - also a Jew - an "avowed Israel hater," and criticized the decision to award her the prize. The group accused her of calling for a boycott of Israel and treating Palestinian groups Hamas and Hezbollah as legitimate political movements.
Butler has denied the allegations in recent newspaper interviews.
"I am convinced that even those who disagree with Butler's theses must admit that as a philosopher and public intellectual, she has an influence that goes far beyond the universities," said Semmelroth.
"Her voice is not only listened to, but it is has weight, and is acknowledged and taken seriously."
Demonstrators on both sides of the Israeli-Palestinian conflict were separated by police as they shouted slogans outside the venue, but Butler's acceptance speech ignored the controversy, centring on social engagement and anti-violent protest.