The prize, which includes a citation together with $220,000, is being awarded to Havel for "his outstanding contribution towards world peace and upholding human rights in the most difficult situations."
Previous recipients included former South African President Nelson Mandela and Northern Ireland civil rights leader John Hume.
Havel, who turns 67 on Sunday, was deprived an education by Czechoslovakia's former communist regime due to his wealthy background. He turned to theatre, winning international fame as a playwright.
He served as the Czech president from the fall of communism in 1989 to 2002.
The Gandhi Peace Prize that is given annually is one of India's best known awards and its jury includes the Prime Minister.
It is dedicated to the memory of Mahatma Gandhi. Born 134 years ago, Gandhi led India's non-violent freedom struggle against British rule.
He was assassinated in 1948 by a Hindu fanatic who believed Gandhi was too conciliatory towards the Muslim minority and newly created Pakistan.