The Brokeback Mountain star will be honoured with the prize at the January (12) ceremony to mark her screen career.
Festival chairman Harold Matzner praises the actress' "exceptional blend of talent, versatility and grace", adding: "Every generation, the cinema has a few performers who mesmerise audiences. Michelle Williams epitomises these qualities as she continues to accept challenging role after challenging role."
Previous recipients of the title also include Anne Hathaway, Marion Cotillard, Charlize Theron and Naomi Watts.
It has previously been announced that actress Glenn Close will pick up a Career Achievement Award at the prizegiving, while George Clooney is to be honoured with the prestigious Chairman's trophy.