Best known for interviewing Usama bin Ladin shortly after the 11 September 2001 attacks on the United States, Alluni was arrested in September on the orders of Spanish judge Baltasar Garzon.
Alluni was accused of providing money and information to al-Qaida operatives and recruiting fighters for the group.
His detention sparked outrage among Arab human rights groups, journalists and colleagues at Aljazeera, who called it an attack on press freedom.
The Francisca Mateos foundation, which gave him the peace prize, is a Spanish non-governmental organisation dedicated to international cooperation and social work within Spain.
Previous recipients of the award include exiled Tibetan spiritual leader the Dalai Lama and Burmese democracy leader Aung San Suu Kyi.
Alluni won the prize for his work covering wars in Iraq and Afghanistan, portraying the brutality of conflict and fighting manipulation of the media, a foundation statement said. It also appeared to be offering him a gesture of solidarity.
"You are not only innocent, you are a good professional, a hero and an example to be followed," the statement said.
Released on bail in October on medical grounds, the elegant but tired-looking journalist, who holds Spanish citizenship, said he was sure Spanish justice would prove him innocent.
Let justice be done
No date for a trial has been announced.
"I believe that if I am judged fairly [people will see] that the charges ... are not based on credible evidence. I, like many people, believe in my innocence, and eventually they will have to let me go," Alluni said after receiving the prize.
He said he had taken money to Syrian exiles in Afghanistan and Turkey as a gesture of solidarity, but denied they were al-Qaida members.
"I believe that if I am judged fairly eventually they will have to let me go"
He also said the arrest had left him disillusioned about press freedom in the wake of the US-led war on terror, which Spanish Prime Minister Jose Maria Aznar has staunchly supported.
"Americans and Europeans who have interviewed Bin Ladin when they returned to their countries were given tributes, prizes," Alluni said.
"When I returned to my country, which is Spain, I found myself caught up in this legal case."