The veteran US singer, 72, received the Legion d'Honneur in a ceremony in Paris.
He had been nominated for the award by avowed Dylan fan Aurelie Filippetti, France's minister of culture.
The nomination was blocked temporarily earlier this year after army general Jean-Louis Georgelin, the Grand Chancellor of the Legion, voiced reservations about Dylan's use of cannabis and anti-war politics.
A 17-member panel, led by Georgelin, decides collectively whether or not to “receive” a nominee, on the basis of their “public services or professional activities, of a duration of at least 20 years,” according to the Legion’s rules.
The panel must also take into account the nominee’s “recent police record, and the results of an inquiry into the candidate’s honour and morality.” At the time a spokeswoman confirmed that a criminal record would exclude a nominee from joining the elite group.
Strictly speaking, non-French citizens cannot become members of the Legion d’honneur, but they can wear the same insignia in recognition of service to France or work that is deemed to uphold the ideals of the country. It is considered as great an honour as full membership.
Dylan joins his 1960s contemporary and fellow anti-war activist Sir Paul McCartney, who in 2012 was made an Officer of the Légion d’honneur by French President François Hollande.
In May 2012, Dylan was awarded the Presidential Medal of Freedom by US President Barack Obama, the highest available civilian honour in the United States.Established by Napoleon, the Order of the Legion d'Honneur honours individuals who have served France in various ways.