Paul Simon and Art Garfunkle performed "Mrs. Robinson" from Nichols' 1967 film, "The Graduate," for which he won the directing Oscar, AFI said in a news release.
The tribute, which was taped for broadcast June 26 on TV Land, included a moving tribute from Julia Roberts, who appeared in Nichols' drama "Closer" and Elaine May, Nichols' writing and comedy partner and friend for more than 60 years.
Robin Williams, who starred in Nichols' comedy "The Birdcage," performed a comedy monologue and Eric Idle of Monty Python led the crowd in a sing-a-long performance of "Always Look on the Bright Side of Life." Nichols, a seven-time Tony Award winner, won the award in 2005 for directing the Broadway production of "Monty Python's Spamalot."
Other attendees at the event included Kevin Spacey, Calista Flockhart, Harrison Ford, Dustin Hoffman, Shirley MacLaine, Mary-Louise Parker, Natalie Portman and Emma Thompson.
"It's Mike's grace that makes you feel, when you work with him, like you've been invited to an impromptu gathering of the most interesting, inventive people in town, and somehow, miraculously, you're one of those people," Streep said as she presented Nichols, her longtime collaborator, with the award.
"If I thanked all who contributed importantly over the years, we would be here till Miley Cyrus' AFI Award," Nichols joked as he collected his honor.