The former Genesis singer picked up the “prog god” award at the event at Shakespeare’s Globe in London.
Others winners on the night included keyboard legend Rick Wakeman, Dream Theater and Camel founder Andy Latimer.
The ceremony, now in its third year, was hosted by BBC news presenter and prog rock fan Gavin Esler.
After receiving his award from comedian Bill Bailey, Gabriel said: “Despite prog probably being the most derided musical genre of all time there were – as today – a lot of extraordinary musicians trying to break down the barriers to reject the rules of music.”
He told the BBC backstage that he was “a lot more comfortable” with the prog label now than earlier in his career.
“It was genuinely pioneering at time. We didn’t always get it right, but when it did work we could move people and get some magic happening.
“I see it all as a very healthy part of growing up.”
Gabriel, who left Genesis in 1975, enjoyed massive commercial success as a solo artist with his 1986 album, So, which featured the hit singles Sledgehammer and Don’t Give Up.
To mark the album’s 25th anniversary he has been on a two-year Back To Front tour – ending in December 2014 – which features many of the musicians who played on the original recording.
A well-known human rights activist, Gabriel was behind OD2, one of the first online music download services, and co-founded of the world music festival Womad.
“From a groundbreaking eight years with Genesis to a solo career that has now stretched almost 40 years, few artists have striven to push back the creative boundaries, generating a body of work that in its very nature progresses ever onwards,” said Jerry Ewing, editor of Prog Magazine, who founded the awards in 2012.
“From massive worldwide hits through startling experimentation and pioneering work with world music, as well as his fantastic work outside of music and an astute grasp of technology, it really is an honour to pay tribute to Peter in this way.”
The live event award went to 2012’s “prog god” Rick Wakeman for his Journey To The Centre Of The Earth 40th anniversary tour.
The ceremony on Thursday opened with a performance by 2014 album of the year winners, Transatlantic – whose members include Marillion bassist Pete Trewavas.
Dream Theater, who celebrate their 30th anniversary in 2015, were named band of the year.
The award for album design, named after the late Storm Thorgerson, went to ex-Marillion singer Fish’s A Feast of Consequences, designed by Mark Wilkinson.
The lifetime achievement award was accepted by Andy Latimer, one of the founder members of prog rock band Camel, who formed in 1971, and have released 14 studio albums and continue to tour.
“At a time when Kate Bush is playing live, a new Pink Floyd album and a King Crimson tour are also helping push progressive music into the public spotlight, a night like tonight really shows the diversity and far reaching appeal of this music,” Ewing said.
The 2014 Progressive Music Award winners in full:
Live Event: Rick Wakeman – Journey To The Centre Of The Earth 40th Anniversary Tour
Breakthrough: Syd Arthur
Anthem: Anathema – Anathema
The Storm Thorgerson Grand Design: Fish – A Feast of Consequences
Album of the Year: Transatlantic – Kaleidoscope
Band of the Year: Dream Theater
Outer Limits: Uriah Heep
Virtuoso: Kef Arjen Lucassen
Guiding Light: Sonja Kristina
Visionary: Robert John Godfrey
Lifetime Achievement: Andy Latimer
Prog God: Peter Gabriel