Estemirova was a vocal critic of human rights abuses in Chechnya
Russian rights group Memorial has won the European Parliament's annual Sakharov Prize, in memory of murdered activist Natalya Estemirova.
Estemirova was found dead in July in the Russian republic of Ingushetia after being abducted in Chechnya.
A Moscow court recently ordered Memorial to retract its accusation that the Chechen President Ramzan Kadyrov was responsible for her murder.
Memorial campaigns against abuses in countries of the former Soviet Union.
'Circle of fear'
Awarding the prize, the European Parliament President Jerzy Buzek said people who defended human rights must be free to express themselves.
He said the assembly hoped "to contribute to ending the circle of fear and violence surrounding human rights defenders in the Russian Federation".
The prize, named after the late Soviet dissident Andrei Sakharov, went to Memorial head Oleg Orlov and the group's activists Sergei Kovalev and Lyudmilla Alexeyeva.
In a statement, Mr Orlov said: "I am flattered... that we have been awarded the Sakharov prize.
"In our view the prize has been awarded to the Russian rights movement. I am thankful for that," the statement said, according to AFP news agency.
But he admitted having concerns about the rights movement in Russia.
"We see that the development of the situation is not going in the direction that we would have liked," he said.
"This is also our fault. The rights mechanisms that we worked out at the beginning of the 1990s are not working today."
This month, Mr Orlov lost a defamation lawsuit brought by President Kadyrov. He was ordered to retract his accusations that Mr Kadyrov had been behind Estemirova's murder.
The Sakharov Prize for Freedom of Thought, now in its 21st year, comes with a cash reward of 50,000 euros ($75,000; £45,000). It will be awarded at a ceremony in Strasbourg in December.
The Chinese dissident and civil rights campaigner Hu Jia won the prize last year.