The city-state's prime minister for 31 years, Mr Lee was widely respected as the architect of Singapore's prosperity, transforming it from a port city into a wealthy global hub.
The Straits Times Asian of the Year recognises an individual or organisation that has contributed significantly to improving lives either at home or in the wider neighbourhood.
The inaugural award, in 2012, went to Myanmar President Thein Sein. The 2013 award was shared by Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe. Last year, the editors picked India's Narendra Modi for the award.
The citation bestowing this year's award posthumously on Mr Lee said: "Few Asians have made such an impact as Mr Lee. His passing was a reminder of how big a role he played in steering and shaping modern Singapore. He was both a visionary and a radical thinker, and his views and policies laid the foundation for what Singapore stands for."
Mr Lee, the citation said, played key roles in introducing policies and attracting investments that turned Singapore into a modern, economic success story.
"At the forefront of his policies was clean government and good governance, and his belief in a meritocratic, multi-racial and multi-religious society. He eschewed ideological positions or political correctness, and said often that he was guided in his political judgments by looking for 'what works'," said the citation.
In death, Mr Lee galvanised Singaporeans and reminded many of what the country has stood for since its early founding, it said.
The week of national mourning held in his honour saw a spontaneous outpouring of grief and drew Singaporeans closer together as a people, which some described as Mr Lee's parting gift to his countrymen.
The long line of luminaries who stepped forward to pay him tribute, from around the world, as well as leaders who flew in for his funeral, spoke volumes for the respect he commanded, it added.
Mr Warren Fernandez, Editor of The Straits Times, who chairs the editorial board that picks the Asian of the Year, said: "Very few people in Asia have influenced their nations and their neighbourhood as Mr Lee did in his long years as national leader and international statesman.
"His passing galvanised his nation, reminding Singaporeans of the significance of the Jubilee year celebrations of their country's independence. The reaction abroad was just as moving, with a myriad of world leaders, as well as respected academics and commentators, expounding on how he had shaped their thinking on issues and contributed to their understanding of Asia and the world. This reflected the standing that Mr Lee had built up for himself, and Singapore.
"Mr Lee's ideas and principles endure long after he stepped down from office and are likely to do so for years to come. You can see this from the way his books continue to be bought and studied around the world."
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