According to the prize committee, Merkel will receive the award "to mark her strong record of support for the German Jewish community and her outspoken denunciation of anti-Semitism throughout Europe.
"The Conference of European Rabbis will also recognize the chancellor’s decisive action last year when a district court in Cologne ruled that the religious circumcision of a young boy constituted an irreversible and unlawful attack on the child.
"The speed, with which Chancellor Merkel responded to this most urgent matter, first pledging and then delivering an agreeable solution which protected the religious practices of both the Jewish and Muslim communities in Germany, was received with relief and gratitude by faith groups in Germany, Europe and the world."
The prize will be presented to the German chancellor on May 22 at a ceremony at the Great Synagogue of Europe in Brussels.
Chief Rabbi Goldschmidt, the president of the CER, noted that "Chancellor Merkel is a worthy recipient in recognition of her continuing efforts of inter-communal harmony across Europe, her friendship towards the Jewish community and outstanding contributions to the promotion of tolerance and understanding."
The Award is named in honor and memory of Lord Immanuel Jakobovits, a former president of the CER and chief rabbi of the United Hebrew Congregations of the Commonwealth.
"The ability to bring communities together and recognize the value of faith in a modernizing world is one that Lord Jakobovits treasured throughout his life and it is that character trait, above all other, which this award recognizes," Rabbi Goldschmidt added.