Rajinikanth will be honoured with the prestigious Dadasaheb Phalke Award, Information and Broadcasting Minister Prakash Javadekar announced.
The announcement comes days head of the April 6 Assembly polls in Tamil Nadu from where the 70-year-old superstar hails and has a massive following among the people.
The Dadasaheb Phalke Award, Indian cinema's highest honour for an artiste, for 2019, will be presented to Rajinikanth on May 3.
Prime Minister Narendra Damodardas Modi hailed Rajinikanth for his contribution to cinema while congratulating him on the honour.
'Popular across generations, a body of work few can boast of, diverse roles and an endearing personality...that's Shri @rajinikanth Ji for you. It is a matter of immense joy that Thalaiva has been conferred with the Dadasaheb Phalke Award. Congratulations to him,' Modi said in a tweet.
Announcing the award for Rajinikanth, Javadekar said, 'India every year gives Dadasaheb Phalke award to a film personality. This year this selection has been made by a jury comprising Asha Bhosle, Mohanlal, Biswajit Chatterjee, Shankar Mahadevan and Subhash Ghai.
'They unanimously recommended that superstar Rajinikanth be conferred with Dadasaheb Phalke award and we accepted it,' he said.
For about 50 years, Rajinikanth has been the 'uncrowned king' of the film world, Javadekar said, hailing the superstar.
'He (Rajinikanth) has been shining like the sun in the film world. He has created a space in the hearts of the people through his talent, hard work and diligence,' he said.
To a question that the announcement comes just ahead of the assembly polls in Tamil Nadu, Javadekar shot back, 'This is an award related to the film world and Rajinikanth has been working for 50 years...one must ask proper questions.'
Last December, Rajinikanth had shelved plans to make a foray into electoral politics.
Making a U-turn, the superstar had announced he will not enter politics in view of his frail health.
Rajinikanth made his debut in the 1975 Tamil film Apoorva Ragangal. He has delivered superhit films such as Billu, Muthu, Baashha, Sivaji, and Enthiran.
Rajinikanth also starred in several Bollywood movies like Hum, Andha Kanoon, Bhagwaan Dada, Aatank hi Aatank and Chaalbaaz
Congratulatory messages have been pouring in.
'It is a great pleasure that the highest award, the Dadasaheb Phalke Award, has been announced to Rajinikanth, the supreme star and my dearest friend. The award is 100 per cent appropriate for Rajini, who has proven that he can win over fans by appearing on screen,' Kamal Haasan tweeted.
DMK President M K Stalin described Rajinikanth as a 'dear friend' and an 'unparalleled performer' and expressed joy over him being selected for the award.
'Delayed but welcome,' he said in a tweet.
He wished that Rajinikanth, 'a symbol of acting and friendship,' continues with his journey in filmdom.
Rajinikanth is the third cinema personality after the late thespian Sivaji Ganesan and the late director K Balachander, also Rajinikanth's mentor, to have been chosen for the award from Tamil Nadu.