The award is presented each year to a songwriter "whose body of work is of such high quality and impact, that it upholds the gold standard set by the legendary Johnny Mercer," the organization said in a statement.
Parton will be honored on June 7 at the annual awards dinner in New York. Previous honorees include Kris Kristofferson, Smokey Robinson, Stevie Wonder, Carole King, Billy Joel, Paul Simon, Hal David and Burt Bacharach.
The namesake of the award, Johnny Mercer, was the lyricist and songwriter of numerous jazz standards, including "Fools Rush In," "Moon River," and "That Old Black Magic," according to johnnymercer.com.
Yahoo Music reports that Mercer's prolific songbook includes more than 1,500 songs that have since become American staples. Mercer was also a successful recording artist, Yahoo Music's Web site says, with a string of hits in the 1940s, including collaborations with the likes of Bing Crosby, Duke Ellington and Bobby Darin.
Parton wrote and recorded such hits as "I Will Always Love You," "Here You Come Again" and "Why'd You Come in Here Lookin' Like That." She was inducted into the Songwriters Hall of Fame in 2001.