Wilhelm (Wilm) Hosenfeld was made famous in "The Pianist", the 2002 Oscar-winning movie by Roman Polanski.
The film depicts how the German officer, stationed in occupied Poland, helped and eventually saved the life of Jewish pianist Wladyslaw Szpilman.
"Following a thorough examination of all the documentation, the Commission decided to name Wilm Hosenfeld a 'Righteous Among the Nations', for his efforts to rescue Jews during the Holocaust," a statement from the Yad Vashem Commission says.
Hosenfeld was stationed as a Wehrmacht soldier in Poland and spent most of the war as a sports and culture officer in Warsaw.
Hosenfeld's deeds were recognized only after his death
His actions were brought to attention only years after the war ended, when Wladyslaw Szpilman wrote about how, in November 1944, Hosenfeld had helped him find shelter and had supplied him with food and blankets. Szpilman had been incarcerated in the Warsaw Ghetto.
The diary of another Holocaust survivor said Hosenfeld had given him work after he escaped from a train on the way from the Warsaw Ghetto to the Treblinka death camp.
After the war Hosenfeld was himself arrested by Soviet troops, tried and sentenced to life imprisonment. In 1952 he died in a Soviet prison camp with his deeds unrecognized.
The Yad Vashem commission said Hosenfeld's diaries and letters showed that he had expressed his "horror at the extermination of the Jewish people."
The commission had earlier rejected a request to honor Hosenfeld, saying his role in the interrogation of prisoners needed to be clarified. The German officer had been involved in interrogations during the Warsaw uprising in the summer of 1944.
However, new material, including Hosenfeld's diaries and letters, clarified "his consistent stance against the Nazi police toward the Jews," the commission said. The new documents made it clear that, although Hosenfeld initially had supported the Nazis, he became increasingly "disgusted" with the regime's oppression of Poles, and its persecution of Jews and Polish clergy.
Award ceremony in Berlin
The award was accepted by Hosenfeld's son, 82-year old Detlev Hosenfeld, at the Jewish museum in Berlin.
Wladyslaw Szpilman died in 2000 but his widow Halina Szpilman was present at Friday's ceremony, as were his son Andrej Szpilman.
"Shortly before he died my father had a notary communicate his wish to see Wilhelm Hosenfeld honoured by Yad Vashem," Andrej Szpilman said.
"This is a great joy for me today."
Hosenfeld is one of the few German World War Two soldiers to be awarded the title of "Righteous Among the Nations", Israel's highest award for non-Jews.
Since the 1960s some 22,000 people who helped Jews escape and survive during the war have been honored by Yad Vashem.
Editor: Susan Houlton