She was praised for her work rebuilding the nation after civil war and leading a process of reconciliation.
The Ibrahim Prize aims to distinguish leaders who, during their time in office, have developed their countries, strengthened democracy and human rights for the shared benefit of their people, and advanced sustainable development.
"Liberia continues to face many challenges".
She is the first woman to win the award. "Nevertheless, during her twelve years in office, Ellen Johnson Sirleaf laid the foundations on which Liberia can now build".
Sirleaf, the continent's first elected female president, left office in late January, after overseeing the first democratic transfer of power in Liberia since 1944. This led Liberia to move up ten places in the Index's overall ranking during this period.
Sirleaf is a 2011 Nobel Peace Prize victor and Africa's first elected woman president.
Previous winners include former Namibian President Hifikepunye Pohamba (2014), former Cape Verde President Pedro Pires (2011), former Bostwana President Festus Mogae (2008), and former Mozambique President Joaquim Chissano (2007). Nelson Mandela was made the inaugural Honorary Laureate in 2007.
The continent's first ever female head of state becomes only the fifth victor of the annual Ibrahim pPrize for achievement in African leadership since its launch in 2006, as it is only given out when there is deemed to be a worthy candidate.
Mrs Sirleaf served two terms as president, but could not run again in recent polls, which were won by former footballer George Weah.
In some years, the award, which was launched in 2006, has not been awarded as no candidate was considered good enough.
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