The 43-year-old Swede becomes the first non-American to win the biennial award as she was recognised for her outstanding achievements both on and off the course.
Sorenstam won 89 tournaments worldwide during her glittering career, including 10 major titles, and she remains the all-time leading money winner on the LPGA Tour with earnings of over $22m.
She is also the second-highest points scorer in the Solheim Cup, posting a record of 22 wins, 11 defeats and four halved matches in her eight appearances for Europe.
Sorenstam won her 72nd and final LPGA Tour title in 2008 before announcing her retirement, and she has since set up a number of businesses including a teaching academy, a golf course design firm and a financial-planning group.
She is also the spokesperson for a charity which encourages children to live a healthy, active lifestyle through improved fitness and nutrition.
"Annika's impact upon women's golf in the modern era has been remarkable, setting a standard that may never be touched," said PGA of America President Ted Bishop.
"Her commitment to fitness and excellence made her a legend on the course, but her legacy in the game also includes a sincere dedication to growing a healthy next generation and inspiring future young women through golf.
"The PGA is honored to now call her the 2013 PGA First Lady of Golf."
Sorenstam added: "I have been so fortunate throughout my life to have people who helped pave the way for me to work hard and exceed my goals on and off the course.
"I truly feel like I am living a dream and want to help the next generation do the same.
"It's gratifying that The PGA of America has taken notice of our programming that offers junior girls the opportunity to play first-class tournaments around the world, while also educating them about the importance of health and wellness. I'm flattered to be named the 2013 PGA First Lady of Golf."