Harvard's Graduate School of Design announced the award on Monday, with members of the prize jury calling it the embodiment of "the optimistic idea that design can be a transformative force".
"The decision to award Madrid Río the Green Prize in Urban Design was motivated by the jury's desire to highlight the potential for thoughtfully planned and carefully executed mobility infrastructures to transform a city and its region," wrote jury chair Rahul Mehrotra, Professor of Urban Design and Planning at Harvard's Graduate School of Design.
"The extent to which the project harnesses the deployment of new infrastructures as an opportunity to repair and regenerate the city through carefully articulated design interventions is particularly valuable within the context of contemporary urbanization globally."
The Veronica Rudge award is given out biennially to projects around the world that make a "positive contribution to the public realm of a city" and that improve "the quality of urban life in that context," according to the award's website.
Madrid's Río park project was first launched in 2005 to revive an area along the Manzanares River that had been largely neglected, formerly made up of tunnels dug to bury an old highway, the M-30.
Now it has been transformed into green space with sports areas, biking paths, gardens and even an "urban beach".
The project also brought back to life historic dams and bridges.
"With these new river crossings and the incorporation of existing historic features into the new park plan, Madrid Río has strengthened surrounding neighborhoods' connection to the new amenities and to each other," the graduate school wrote in its announcement.
Previous winners of the Veronica Rudge award include the Metro do Porto transit project in Portugal and the Northeastern Urban Integration Project in Medellín, Colombia, both in 2013.