"It's a massive honor," said Waugh, 40 and a father of three, after the award was announced in Sydney.
"It came as a bit of a surprise to me, but I feel really honored to be part of it all," he said on Friday.
The honor is bestowed each year by The Australian Father's Day Council, which works in support of a Sydney-based children's charity, the Shepherd Center.
Waugh, Test cricket's most successful captain, retired from the sport in 2004, when he was also named Australian of the Year.
The new honor recognised Waugh for his contribution to the lives of children, both as a role model and through his charity work.
Waugh is a patron of a number of Australian support groups for children and of the Udayan home for the children of lepers, which is located near the Indian city of Kolkata.
He also supports disadvantaged youth through the Steve Waugh Foundation.
"When I was first confronted by a leper colony in India, I had just become a dad for the first time and it really just hit home to me," Waugh said on Friday.
"I just felt like I had to do something to help."
Waugh's wife, Lynette, said her husband had remained a dedicated father and family man despite the demands of his international cricket career.
"Whether he's home or when he was away for long times, he always made the children feel remembered and special," she said.
Sunday is Father's Day in Australia.