The three-time Formula One world champion, and non-executive chairman of the Mercedes F1 team, received his award from Silver Arrows star Lewis Hamilton.
Lauda remains the only driver to have won world championships for both Ferrari and McLaren, the sport's two most successful constructors.
His legend also includes perhaps the most courageous comeback in sporting history, as he returned to racing just six weeks after suffering horrific burns - and subsequently being read his last rites - in a fiery crash at the Nurburgring in 1976. His battle that season with James Hunt was turned into the major Hollywood movie, ‘Rush'.
Alongside Hamilton and Lauda, the Laureus World Sports Awards drew several stars from the world of F1, including current runaway championship leader Nico Rosberg, two-time world champion Mika Hakkinen and the Mercedes F1 team.
Hamilton had made the six-man shortlist for Sportsman of the Year, a title which went to tennis world number one Novak Djokvoic, who reached all four Grand Slam finals and won three of them last year.
After winning three categories at last year's FIA prize-giving gala, Toro Rosso's Max Verstappen also missed out on another gong as golfer Jordan Spieth pipped him to the Breakthrough of the Year award.
VIDEO: Lauda - why I had to race again
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All images courtesy Laureus World Sports Awards