Leading figures in the WRU say he epitomises the values of rugby on and off the field and fully deserves the honour bestowed on him.
Edwards won 53 caps for Wales between 1967 and 1978, 13 as captain along with 10 caps for the British and Irish Lions while taking part in victorious tours of New Zealand in 1971 and South Africa in 1974.
In 2003 a Rugby World magazine poll named him as the greatest player of all time and in 2007 he was awarded a CBE.
WRU President, Dennis Gethin, said: “Gareth Edwards fully deserves the honour of a Knighthood for the incredible contribution to rugby he has made both on and off the field.
“His reputation as a player is possibly unparalleled and since retiring from the game he has continued to be a powerful ambassador for rugby both in Wales and around the world.
“I had the privilege of playing in the same Cardiff team as Gareth and I am proud to regard him as a friend.”
WRU Chairman, Gareth Davies, added: “The whole of Welsh rugby will be delighted that Gareth has received this recognition for the incredible contribution he has made not only to the game but to the very fibre and reputation of our nation.
“He epitomises the values of fair play and courage which are central to rugby and in his off the field career as a broadcaster and businessman he remains a great ambassador for our game.
“Everyone who knows Gareth regards him as a true gentleman who is always approachable, courteous and welcoming despite his towering reputation as one of rugby’s true greats.”
WRu Group Chief Executive, Roger Lewis, said: “This is a well-deserved honour which has rightly been conferred on a man who is not just one of rugby’s greatest players but one of the most highly regarded sportsmen of all time.
“If you want to encourage anyone to take up rugby the argument is won as soon as you draw on the example of Gareth as an example of the core values our game represents.
“All of us who watched him in action remain in awe of his incredible talents as a player and since hanging up his boots he has gone on to become one of our most treasured and effective ambassadors for rugby and for Wales wherever he travels around the world.”
The WRU would also like to congratulate dual international Jonathan Davies who was awarded the OBE for voluntary and charitable services to people with cancer.