The Rastafarian refused to be made an Officer of the Order of the British Empire (OBE), one of the many honours the queen bestows on achievers in public life each New Year.
"I get angry when I hear that word 'empire'," Zephaniah, 48, wrote in an article for the Guardian newspaper. "It reminds me of slavery, it reminds me of thousands of years of brutality."
His move echoes Beatle John Lennon's return of his MBE (Member of the Order of the British Empire) medal in 1969 over Britain's stance on Vietnam and the civil war in Nigeria.
Zephaniah said he would never accept an award from Prime Minister Tony Blair, whose office picks the list to be approved by the monarch.
"You can't fool me, Mr Blair," he wrote. "You want to privatise us all; you want to send us to war. You stay silent when we need you to speak for us, preferring to be the voice of the US."
Zephaniah said the honours system was being used to make the establishment appear more modern and inclusive and said he was puzzled the OBE was for his services to literature.
"You stay silent when we need you to speak for us, preferring to be the voice of the US"
"There are a whole lot of writers who are better than me," he wrote. "Why can't they give me one for my work in animal rights...for my struggle against racism?"
Born in Britain's second city, Birmingham, Zephaniah spent his early years in Jamaica, where he developed a love for Caribbean music and poetry.
He published his first collection, "Pen Rhythm", in 1980 and has become known for his distinctive "performance poetry".
Zephaniah is a Rastafarian, a follower of the religious and political movement that originated in Jamaica in the 1930s.
Rastafarianism bases its doctrine on selections from the Bible and regards Ethiopia as the Promised Land and Haile Selassie as a messiah, with many members advocating non-violence and rejecting materialism.