Emir Selimi, 31, moved to Sweden when he was eight years old from the former Yugoslavia in Serbia. As an adult he set up the Young Roma group which started up the first web-based Roma school and helps develop the Romany minority language.
Selimi also lectures in schools and liaises with the police and local authorities to stamp out discrimination against the Roma community.
"What Emir is doing is truly in the spirit of Raoul Wallenberg by showing courage and raising awareness to highlight xenophobia and intolerance," Olle Wästberg, chairperson of the jury, told The Local.
"He is very much an inspiration, particularly for young people."
In a statement Selimi said he was humbled to receive the award which was established last year to coincide with Raoul Wallenberg Day on August 27th.
"I strongly believe that every person can make a difference. You don't have to be a superhero to stop racism or the injustices that can affect anyone," said the prize winner.
The jury were particularly impressed with how Selimi had attempted to combat Sweden's sometimes negative image of the Roma population. As part of his work he has made strong contacts with the Jewish, Sami and Muslim communities and hosted lectures on intolerance in school.
"When Emir was growing up in Serbia he said experienced a lot of discrimination in school. He was kicked and spat at because of his Roma background which had a significant effect on him," said Wästberg.
"Emir said when he came to Sweden that he didn't suffer those problems at school. He said the problems started when he entered the labour market where he found his Roma background was a barrier to finding work. Now he is doing something about it by making a difference for the better."
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Selimi will be honoured on Wednesday at a prize-giving ceremony in Stockholm where he will receive a bronze portfolio, a diploma and a 100,000 kronor ($14,400) donation to his organization.
Last year's winner, Siavosh Derakhti, will also attend. The young Muslim from Malmö made headlines in 2013 after winning the award for his work to highlight anti-Semitism in the Swedish south.