Decorating Archbishop Tutu with the Grand Officer of the Legion of Honour - France's highest award for non-heads of state - Mr Chirac praised his role in fighting for reconciliation in the newly-democratic South Africa.
The breakfast award ceremony, attended by about 10 South African personalities, took place in Stellenbosch, the heart of South Africa's wine-growing region.
The owners of the local vineyards are descended from some of the first French settlers in South Africa, who arrived in the country more than 300 years ago.
Archibishop Tutu, already a Nobel Peace laureate and former Archibishop of Cape Town, enjoys international popularity on a level second only to the South African President Nelson Mandela.
A leading figure in the worldwide campaign against apartheid, Archbishop Tutu now heads South Africa's Truth and Reconciliation Commission.
Mr Chirac arrives in Mozambique later on Sunday, the third country in an African tour aimed at encouraging closer political and economic ties, and promoting French interests.
During his three days in South Africa, Mr Chirac has talked of a "new Franco-South African partnership".
Traditionally, France has close relations with francophone West Africa, and is keen to extend this to other parts of the continent, particularly the southern region.
Mr Chirac has also taken the opportunity of the visit to declare his opposition to the "trade not aid" approach to Africa which the United States President Bill Clinton advocates.
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