The announcement was made Monday during Parton's appearance on Jimmy Kimmel Live.
The country music superstar will be presented with the honor during the 50th annual CMA Awards ceremony, which will air on Nov. 2 on ABC.
"Dolly epitomizes the very definition of the Willie Nelson Lifetime Achievement Award," Sarah Trahern, CMA's chief executive officer, said in a statement. "She is a trailblazer who continues to enchant and captivate fans around the world, from her latest No. 1 album, to her sold-out tour, and numerous television projects. She is a treasure and deserving of this industry acclaim for her undeniable contributions to the success of country music today."