Jon Stewart, Lily Tomlin, Joan Rivers and others saluted Carlin at the John F. Kennedy Center for the Performing Arts for inspiring their own comedy, and they took up his cause of pushing the boundaries of free speech.
Actor and comedian Dennis Leary said he grew up in a church that listed banned books and records in the bulletin each Sunday, including Carlin's "Class Clown" and "Seven Words." Leary said he and his fellow altar boys immediately pooled their money to listen to Carlin's "Seven Words."
"That was when I realized you could make money for saying things my dad used to say when he was fixing the car," Leary said.
On the red carpet before the show, Stewart said he was about 10 years old when Carlin's album "Class Clown" was released. Stewart said it made him the funniest kid at school until his friends also found Carlin's work.
"For all his antiestablishment cred, he was a working man. He punched in. He sat down and he wrote," Stewart said. "He respected what he did."
A handful of protesters gathered on Pennsylvania Avenue near the Kennedy Center, some holding signs saying "Carlin's Going to Hell."
The prize was announced shortly before Carlin died of heart failure in June at the age of 71. This is the first time in its 11 years that the award was presented posthumously. The program will be televised later on Public Broadcasting Service stations.
"He was thrilled," Carlin's daughter, Kelly Carlin McCall, told The Associated Press shortly before the award ceremony. "I think he represented a lot of what Mark Twain did for our country, not only being smart and funny but also being a sharp commentator."
The Twain Prize was instituted in 1998 and first given to comedian and actor Richard Pryor. Recent recipients have included Billy Crystal in 2007 and Steve Martin in 2005.
Carlin had great respect for the prize and its previous honorees, said Jerry Hamza, Carlin's longtime manager and best friend. Carlin "always flipped" over the comedy of Tomlin and Pryor, two previous recipients.
"He would have been humbly grateful," Hamza told The AP. "Also George, who throughout his career was perceived as an outsider or maverick, had a real desire to connect with other comedians. He loved being in that club."
Carlin's career as a comedian, actor and author spanned more than 50 years. He was paired for a brief time with longtime friend Jack Burns, then went solo in 1962, growing his hair long and embracing the counterculture movement of the era.
He would record 23 comedy albums, win four Grammys, serve as the first host of "Saturday Night Live" and make more than a dozen TV specials for HBO.
His "Seven Words" routine was arguably his most famous. It was the subject of a U.S. Supreme Court ruling on free speech that upheld the government's right to sanction broadcasters who air offensive language when children might be listening.
Carlin remained active right until his death, and his 14th and final HBO special, "It's Bad For Ya," in which he mocks death, is scheduled for release on DVD on Nov. 25. His 1984 album, "Carlin on Campus," was rereleased earlier this month.
When her father died, McCall said, he left behind an uncompleted autobiography. It is scheduled to be published next year, with herself, Carlin's brother, Patrick, and others filling in the parts he didn't get to finish.
Many of the comics, including Bill Maher, used the recent election and the ceremony's proximity to the White House as fodder for a slew of politically charged jokes.
"It's a great day to be an American again. We have a president who can speak English," Maher said, jabbing President George W. Bush for his famous verbal flubs.
Though Carlin said he didn't vote in presidential elections, he was a keen political observer and commentator.
"On certain things you'd call him a lefty," Hamza said. "On other things, you'd be surprised how conservative he might be ... He was all for the (Iraq) war until he found out the basis was false."
Associated Press writer John Rogers in Los Angeles contributed to this report.
By Brett Zongker