The award, to be given Oct 12, comes with a $14,000 (Euros 10,000) prize.
Winterbottom's film, which premiered at Cannes, is based on the 2003 book of the same name by French journalist Mariane Pearl, whose husband Daniel Pearl was kidnapped and murdered by terrorists in Pakistan in 2002.
'We have chosen this film because it deals with a highly topical and politically important issue and at the same, is a plea against hate and violence,' said Juergen Boos, director of the Frankfurt Book Fair. 'Winterbottom's semi-documentary style gives the work a powerful authenticity.'
Other nominees included Bille August's Goodbye Bafana, Pascale Ferran's Lady Chatterley, Todd Field's Little Children, Steven Soderbergh's The Good German, Kevin Macdonald's The Last King Of Scotland and Richard Eyre's Notes On A Scandal.
The prestigious Frankfurt Book Fair created the award in 2004 and last year's winner was Atom Egoyan for Where The Truth Lies.