The singer received a standing ovation as his sister Tyka Nelson took the stage to accept the award on his behalf.
"Prince defied the odds," Nelson said of her late brother. "A black teen from Minnesota ... he had the courage to be different. With his vision and God-given talent, he is still one of the world's most respected and loved artists."
"We'll keep this for you in Paisley Park," Nelson concluded tearfully, referencing the award.
Selena Gomez, who won the award for Favorite Female Artist - Pop/Rock, also returned to the spotlight after taking a step back to focus on her health.
The singer revealed she was diagnosed with lupus last year.
Triumphantly taking the stage in a bold red dress, Gomez told her fans why she began her break, back in August.
"I had to stop," she started. "I had everything and I was absolutely broken inside. And I kept it all together enough never to let you down ... [instead] I let myself down."
She then thanked her fans "because you guys are so damn loyal and I don't know what I did to deserve you."
Bruno Mars kicked off the night's performances with a rendition of his latest hit, "24K Magic." The singer stayed with the album's retro vibe, by wearing an 80s-inspired track suit and gold chain.
Ciara and her baby bump -- she's expecting a child with husband, NFL player Russell Wilson -- were among the celebrities who were brought to their feet during his choreography-heavy performance.
Following his performance, many took the stage, including Niall Horan, who performed a stripped-down version of his song, "This Town."
Fifth Harmony performed "That's My Girl," before taking home an award, while The Chainsmokers performed their catchy hit "Closer." Also Lady Gaga performed "Million Reasons" from her latest album in a picturesque faux field.
Green Day's performance stood out as the band used it to make a political statement about President-elect Donald Trump. Green Day chanted repeatedly, "No Trump! No KKK! No fascist USA!"
Before that, however, John Legend performed his latest single, "Love Me Now" onstage, inside Los Angeles' Microsoft Theatre, while Justin Bieber's performance was streamed live from his latest tour stop in Bologna, Italy.
DJ Khaled had the theater up on their feet when he performed his hit single, "Do You Mind" with Nicki Minaj, Rick Ross, Future and August Alsina.
Robert Downey Jr. presented Sting with "The American Music Award of Merit." The British rocker then performed a bevy of songs, concluding with "Every Breath You Take."
Afterward, Sting gave an acceptance speech, saying that he owes a large "debt to American music." He also called Rock and Roll, "America's greatest export."