Lynch was honored in recognition of his unorthodox and complex directorial style in films such as "Eraserhead" and "Blue Velvet," said the BBC.
Lynch was at the festival to promote his newest picture, "Inland Empire," which has already reportedly confounded critics and drawn an explanation from its quirky director.
"Every film is like going into a new world, going into the unknown. But you should be not afraid of using your intuition, and feel and think your way through," Lynch said of the new film, in which actress Naomi Watts voices a talking rabbit.
Lynch's unusual directing style on the film even reached a point where its leads rarely understood its direction.
"The truth is I didn't know who I was playing -- and I still don't know," said "Inland Empire" star Laura Dern. "I'm looking forward to seeing the film ... to learn more."