The Icon Award "honors a creative talent who, through the course of his or her career, has created a body of work which symbolizes the highest level of achievement in the motion picture art form," festival organizers said.
The actor is set to receive the honor at a Jan. 13 presentation as part of the festival's "Talking Pictures: The Contenders" series, which focuses on Oscar front-runners. The event will include a selection of clips from Douglas' movies, an onstage conversation with the actor and a screening of his film "Solitary Man."
"We're thrilled to have the opportunity to honor Michael Douglas at a time when both his creative prowess and his contributions to world cinema have never been more evident -- or more deserving of celebration," festival director Darryl Macdonald said. "Simply put, he's an American treasure."
Douglas, who revealed earlier this year that he is being treated for cancer, is nominated for a Golden Globe for his role in this year's "Wall Street: Money Never Sleeps."
The 22nd edition of the Palm Springs festival runs Jan. 6-17.
– The Hollywood Reporter