Patel, founder and executive director of city-based Interfaith Youth Core, won the $200,000 prize for his 2007 autobiography 'Acts of Faith: The Story of an American Muslim, the Struggle for the Soul of a Generation'.
"Teaching young people how to appreciate religious diversity is critical to achieving peace and security in the world," said 32-year-old Patel, who was selected from among 67 nominations worldwide.
His organisation, formed in 1998, unites young people of different religions to perform community service and explore their common values. It is now active on more than 50 US college campuses.
Religion professor Susan Garrett said at a time when religious extremists all over the world are harnessing adolescent angst for their own ends, "Patel urges us to take advantage of the short window of time in a young person's life to teach the values of cooperation, compassion and mercy".
In his book, Patel tells his own life story as an India-born Muslim raised in America. The autobiography shows how an angry youth can be transformed into a leader for peace.
The Grawemeyer Awards are five annual $200,000 prizes given in the fields of music, political science, psychology, education and religion.
As a teenager, Patel struggled with his religious heritage and in college developed a sense of rage toward America.
"Every time we see a teenager kill someone in the name of God, we should picture a pair of shadowy hands behind him, showing him how to make the bomb or point the gun and then we should ask: 'Why weren't the hands of people who care about pluralism shaping that kid instead of the hands of religious totalitarians?'" he writes in his book.
Patel is a member of President Obama's Advisory Council on Faith-Based and Neighbourhood Partnerships and the Religious Advisory Committee of the Council on Foreign Relations. He was also named one of America's Best Leaders in 2009.
The University of Louisville and Louisville Presbyterian Seminary jointly award the religion prize.