Jones said in his acceptance speech that it was his first UK honour
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Music legend Quincy Jones and band leader and broadcaster Jools Holland were among the people honoured at the sixth annual BBC Jazz Awards.
Performer and producer Jones, who has a record 76 Grammy nominations and 26 awards from a six-decade career, won the lifetime achievement award.
Holland was named Radio 2 jazz artist of the year.
Clare Teal was named best vocalist at the ceremony at London's Mermaid Theatre, hosted by Paul Gambaccini.
Jones was presented his award by actor Sir Michael Caine, with whom he has been friends since composing music for 1969's The Italian Job.
The 73-year-old started out as a trumpeter in the 1950s, arranging and working with artists including Ray Charles, Count Basie, Duke Ellington and Dizzy Gillespie.
He produced Michael Jackson's global hit albums Off the Wall and Thriller, and has also carried out the role for other popular performers including Frank Sinatra, Aretha Franklin, Donna Summer and Bono.
In 1985, he produced the US number one charity single We Are The World. He has composed music for numerous films including In the Heat of the Night, The Color Purple and the Austin Powers movies.
Other 2006 BBC Jazz Awards winners include:
- Best of jazz award - Anita Wardell
- Best band - Dennis Rollins' Badbone & Co
- Jazz on 3 innovation award - Tim Garland's Lighthouse Project
- Album of the year - The Lyric, by Jim Tomlinson featuring Stacey Kent
- Rising star - Andrew McCormack
- Best instrumentalist - Alan Barnes
Highlights from the BBC Jazz Awards will be broadcast on BBC Radio 3 on Saturday, 15 July at 1800 BST, with the full concert on BBC Radio 2 on Monday, 17 July at 2000 BST.