Previous illustrious recipients include Jean-Luc Godard, Bernardo Bertolucci, Ken Loach, Abbas Kiarostami, Wim Wenders and, last year, Alexander Sokurov.
Commenting on the choice of Hou Hsiao-hsien, the festival's artistic director Frederic Maire said that 'Locarno aims to celebrate one of the leading figures of the 'Taiwanese New Wave' of the 1980s, whose extraordinarily rich body of work has established him as one of the cinema's undisputed masters.
'Indeed, in his themes - autobiographical films about youth and childhood, revisiting modern Taiwanese history, and, more recently, explorations of the individual's place in contemporary society - and via his fundamental interrogation of cinematic form and language, his unique and intriguing style, further refined with every film, Hou Hsiao-hsien has become one of the major auteurs of contemporary
One of Hou Hsiao-hsien's early masterpieces, Summer At Grandpa's, was selected for Locarno's International Competition in 1985 and received a Special Mention from the Ecumenical Jury. His A Time To Live, A Time To Die (1986) and The Puppet Master (1993) were shown on the Piazza Grande.
Hou Hsiao-hsien - who will personally accept the award - is currently finishing work on his latest film The Red Balloon, starring Juliette Binoche, which is an homage to the 1955 film of the same name by Albert Lamorisse as well as part of a celebration for the Musee D'Orsay's 20th anniversary along with three other films commissioned from Olivier Assayas, Raoul Ruiz and Jim Jarmusch.
The Margo Films production - which was pitched at the Capital Regions for Cinema Co-Production Meeting in Berlin last year - is likely to premiere in Cannes in May and could therefore conceivably then be shown in Locarno in August.
Speaking to ScreenDaily, Maire joined in the debate opened by the Berlinale's Dieter Kosslick last month on the strategies adopted by some film festivals to attract talent to their events.
'Locarno will never pay for having someone,' Maire declared. 'We can't and don't want to. If is someone is coming to Locarno, they are coming because they like the place and want to present their film here.'