"This is my 50th year of being a professional actor. That already is worth an award, just to survive 50 years," the Egyptian-born actor said ahead of the ceremony.
The gold statue encased in a red satin box was presented to Sharif by the young co-star of his latest movie Monsieur Ibrahim et les fleurs du Coran (Mr Ibrahim and the Flowers of the Quran). The film, directed by France's Francois Dupeyron, premiered at the 60th edition of the festival.
A visibly moved Sharif, who was greeted by a standing ovation, entertained the crowd at the gala screening with stories of how his mother sent him to English school as a child hoping the bad English cooking would make him lose weight.
"If I were still fat and couldn't speak English, I wouldn't be here today," he said.
Over 80 films
Sharif, born Michael Shalhoub in Alexandria, Egypt, in 1932, made a name for himself on the Egyptian movie scene before heading to Hollywood and leaping to fame in David Lean's classics. He has appeared in more than 80 films over his long career, including some contemporary duds.
Images of the dark-eyed, handsome Sharif in Doctor Zhivago and Funny Girl as well as the whiskery old man in his new movie flashed across the screen during the ceremony.
"I wasn't looking to work, but it's a miraculous script ... For the last 25 years I haven't made anything decent"
In the new film Monsieur Ibrahim, Sharif plays a Muslim grocer who befriends Momo, a poor Jewish boy in a red light district of Paris whose companions are the prostitutes plying their trade along Rue Bleu.
Sharif said the movie marked a "comeback" for him. "I wasn't looking to work, but it's a miraculous script ... For the last 25 years I haven't made anything decent."
When the impish Momo, 13, is abandoned by his father, Monsieur Ibrahim adopts him and together they travel to Ibrahim's native Turkey in a red convertible sports car.
The tender, beautifully shot film gently tackles religious and racial differences in 1960s France. Critics say it could be a candidate for the Oscars next year.
"It's a film of tolerance," said Sharif. "The only thing I'd like is that people are a bit happier, a bit kinder when they come out."
The famous ladies' man and gambler made headlines earlier this month when he was convicted of hitting a policeman at a casino near Paris and received a one-month suspended sentence.
Media reports said Sharif was arguing with the croupier while he played roulette before the policeman intervened.