The jury praised Ahmed Mansoor for regularly raising concerns about arbitrary detention, torture and degrading treatment in the Gulf state.
As a result, it said, he had faced repeated intimidation, harassment and death threats from the UAE authorities and their supporters.
Mr Mansoor could not collect the award in Geneva because of a travel ban.
The Martin Ennals Award is named after the late British lawyer who became the first head of the human rights organisation, Amnesty International.
Mr Mansoor was selected as one of the human rights defenders nominated for the award by a jury of 10 global human rights organisations. The other nominees were Asmaou Diallo of Guinea and Robert Sann Aung of Myanmar.
Before Tuesday's awards ceremony, the jury had said Mr Mansoor's absence would "mark a very disappointing position for the UAE, which is a country that prides itself as one of the hubs of international business and tourism in the Middle East, as well a safe haven in the region".
"As a member of the UN Human Rights Council, which is running for a second term, we expect the UAE authorities to honour their obligations to uphold human rights and protect human rights defenders," a statement said.
Mr Mansoor and four other activists who called for democratic rights in the UAE were arrested and jailed in 2011 on the charge of "insulting officials".
Although pardoned and released later that year, he was banned from travel and had his passport confiscated.
In a video message recorded for the ceremony, Mr Mansoor said: "I hope that my presence as a finalist can show people that we have deep human rights issues that PR companies and a complex network of interests try to dismiss, or at least present as contrary to the reality."
The UAE has shown little tolerance towards dissent since the 2011 Arab Spring. Dozens of people have been detained and most have been tried and convicted of planning to overthrow the government.

Fellow seamer Oliver Hannon-Dalby, 28, and batsman Matthew Lamb, 20, have both signed one-year extensions, to the end of the 2018 season.
Thornton, 24, made his first-team debut for the Bears in the One-Day Cup win over Northamptonshire on 27 April.
A week later, he signed a three-month deal - his first professional contract.
Thornton, who is currently sidelined through injury, helped Berkswell to win the Birmingham League title last summer, having been a Bears second XI regular for the last two seasons.
Since being drafted into the Bears side for his debut, he has played three more One-Day games, finishing on the winning side in two of them.
He also took 4-34 against Somerset on his first-class debut at Taunton - the first of two Championship appearances so far.
Lamb, who turns 21 next week made his first-class debut at Taunton last season, and scored 51 in the first innings of last week's one-wicket defeat by champions Middlesex at Edgbaston, having been brought in for his first appearance of the season to replace injured captain Ian Bell.
Hannon-Dalby, who joined Warwickshire from his native Yorkshire in 2013, has made just two Championship appearances in 2017, having been dropped following the Bears' poor start to the season.
But he played in five of this season's One-Day Cup games, having been part of the side that won the trophy against Surrey at Lord's last September.
He was also in the team when the Birmingham Bears won the T20 Blast in 2014 - and has so far taken five wickets in two wins out of two in this season's group games.
An activist from the United Arab Emirates has won the Martin Ennals Award for Human Rights Defenders.
[NEXT_CONCEPT]
Warwickshire fast bowler Grant Thornton has signed an extended contract with the Bears until the end of the season as a reward for his promising form.