"Last night... I boarded an Air France plane destined for Stockholm to take part in the prize ceremony but in the plane they paged my name and told me that I am barred from leaving the country," Ardalan told AFP.
Ardalan, 36, was honoured last month for "making the demand for equal rights for men and women a central part of the struggle for democracy in Iran," the Olof Palme Memorial Fund announced.
"They took my passport and asked me to refer to the presidential office department for passport affairs after 72 hours to take it back," she said.
"They told me that I still have an open (judicial) case, which is not true."
She said she had been summoned to court on February 24 for unknown reasons.
"I appeared before the court but the inspector was not there... according to law when they are not there they should issue a new summons warrant which they did not," she said.
Ardalan, a figurehead of the Iranian women's movement, was sentenced to three years in prison in April 2007 after being declared a threat to national security for criticizing the state of women's rights in Iran.
She has appealed the verdict and has yet to serve time in prison.
"The only reason for this move is to prevent me from taking part in the ceremony. I think this is unreasonable," she said.
The prize ceremony will be held in Stockholm on March 6.
Ardalan founded a cultural women's centre in the 1990s which in 2005 edited, under her leadership, the first online newsletter on women's rights in Iran, Zanestan.
She also started an international campaign aimed at gathering one million signatures in favor of gender equality.
The Olof Palme award is for outstanding achievement named after Palme, a popular Swedish prime minister who was gunned down by a lone attacker in February 1986, shortly after leaving a Stockholm cinema.
Created to promote peace and disarmament and combat racism and xenophobia, the prize consists of a diploma and $75,000 (463,000 kronor).
Former UN secretary general Kofi Annan and Sudanese human rights lawyer Mossaad Mohamed Ali shared the Olof Palme Prize in 2006, and Myanmar's imprisoned pro-democracy leader Aung San Suu Kyi won it in 2005.
Other past winners include former Czech president Vaclev Havel and human rights group Amnesty International.