The multiple Grammy Award winner co-wrote her first No. 1 hit at age 17 with then-husband Gerry Goffin and was the first female solo artist to sell more than 10 million copies of a single album, with her 1971 release "Tapestry."
The prize honors individuals for lifetime achievement in popular music, the library said. It is named after songwriting brothers George and Ira Gershwin.
King, now 70, topped the charts with the song "It's Too Late" in 1971, but is best known for her work performed by others, including "You've Got a Friend" by James Taylor and "(You Make Me Feel Like) A Natural Woman" by Aretha Franklin.
"I was so pleased when the venerable Library of Congress began honoring writers of popular songs with the Gershwin Prize," King said in a statement. "I'm proud to be the fifth such honoree and the first woman among such distinguished company."
King and Goffin wrote some the biggest hits of the 1960s before their nine-year marriage ended in 1968. They rose to prominence in 1960 writing "Will You Love Me Tomorrow" for the Shirelles.
The duo also scored hits with "Take Good Care of My Baby," performed by Bobby Vee in 1961, "The Loco-Motion," performed by Little Eva in 1962 and "Pleasant Valley Sunday," performed by The Monkees in 1967, among others.
New York-born King did not hit it big as a singer until 1971, when "Tapestry" topped the U.S. album charts for 15 weeks, then a record for a female solo artist.
Past recipients of the award include Paul Simon, Stevie Wonder, Paul McCartney and songwriting tandem Burt Bacharach and Hal David.
(Reporting by Eric Kelsey; Editing by Jill Serjeant and Xavier Briand)