Erdrich, who has written about Native American life from various points of view throughout her career, is being honored for fostering peace and understanding through her writing.
The goal of the Dayton Literary Peace Prize is to advance peace through literature. It is the only annual U.S. literary award recognizing "the power of the written word to promote peace through a better understanding of other cultures, peoples, religions, and political points of view," according to the organization.
Erdrich is a member of the Turtle Mountain Chippewa tribal nation. She was raised in North Dakota by an Ojibwe-French mother and a German-American father, and her works reflect all aspects of her heritage, the AP notes.
Her novel "The Round House," which won the 2012 National Book Award for fiction, is the story of a teenage boy who investigates an attack on his mother on a fictional North Dakota reservation, and his struggle to come to terms with the crime.
"The Plague of Doves" was a finalist for the Pulitzer Prize in 2009. It tells about a long-unsolved crime in a small North Dakota town and how, years later, the consequences are still being felt by the community and nearby Ojibwe reservation.
Erdrich was given the award because her writing illustrates that U.S. history includes violence, discrimination and neglect, said Sharon Rab, co-chairwoman of the Dayton Literary Peace Prize Foundation, according to the Associated Press, which was given first notice of the award.
"Her work reminds us that we are not observers but participants in the national history of the ownership of land and the taking of territory," Rab said.
Erdrich told the AP via email that she is honored to receive a prize that celebrates authors who write about the effects of violence.
"The prize sends a strong political signal, more crucial than ever at this historical moment when we are seeing, day by day, the horrific violence children suffer in war," she wrote.
Erdrich has written 14 novels as well as poetry, short stories, children's books, and a memoir of early motherhood. She also owns Birchbark Books, an independent bookstore in Minneapolis.
The Dayton prizes are awarded each year to writers of fiction and non-fiction works. The distinguished achievement award is given for a writer's entire body of work.
It's named after the late Richard C. Holbrooke, the U.S. diplomat who led the 1995 Dayton Peace Accords which ended the war in Bosnia. The accords have inspired the city of Dayton to continue efforts to promote peace.
The award ceremony will be held Nov. 9 in Dayton, Ohio.
Previous winners include Tim O'Brien, Studs Terkel, Elie Wiesel and Barbara Kingsolver.