Dubbing Smith the "punk rock poet laureate," city officials presented the 60-year-old singer and painter with a plaque and a bouquet of white roses, the Italian news agency ANSA reported.
"I'm very happy to be in Milan, my favorite Italian city," remarked Smith, who wraps up her two-and-a-half-month European tour at the Milan Jamming Festival Monday night.
"Italian crowds have always shown great affection for me," Smith said, adding she was "really impressed" by the attendance at recent Italian anti-war protests.
The former factory worker and rock journalist is expected to spend a day off in the city Tuesday, taking in a performance of "La Traviata" at La Scala, before heading back to the United States for a brief tour.
In 2005, Rolling Stone magazine placed Smith 47th on its list of the 100 Greatest Artists of All Time.