Young, who is probably best known for his hit Heart of Gold, will be presented with the MusiCares award at a dinner and concert in Los Angeles on 29 January, just two days before the actual Grammy ceremony takes place.
Young is going to be the 20th person to be honoured with this award, which in the past has also gone to the singers Aretha Franklin, Neil Diamond and Brian Wilson of the Beach Boys.
MusiCares was founded by the US Recording Academy in 1989 as a charity to help musicians with financial, medical or personal emergency problems.
Neil Young was one of the headline acts at Glastonbury Festival earlier this summer.
