In a statement Wednesday, the jury praised the 68-year-old Atwood for work that covers several genres "with sharpness and irony."
It says she "defends the dignity of women and denounces situations of social injustice."
Atwood has published more than 25 volumes of poetry, fiction and non-fiction and won prestigious awards including Britain's Booker Prize in 2000 for "The Blind Assassin."
She is also known for "The Edible Woman" (1970) and "The Handmaid's Tale" (1983).
Eight Prince of Asturias prizes are awarded each year in categories such as arts, scientific research, sports, letters and humanities. The prizes are named for Crown Prince Felipe.