Officials at the Federation of Jewish Communities objected to the honour, claiming Gibson's 2004 movie The Passion of the Christ portrays Jews as "evil and blood-thirsty."
In a letter to festival bosses posted on the group's website ahead of the prizegiving, the Jewish organization's leaders wrote, "By granting this award, the Karlovy Vary International Film Festival becomes another of the very arguable platforms that are gradually changing the atmosphere of our country from a traditional, relatively tolerant society into one where space is given to hostility, xenophobia, and anti-Semitic ideas."
Festival bosses responded by stating the award would be presented to Gibson in recognition of his "filmmaking skills and his career".
Oscar winner Gibson, a devout Catholic, has had run-ins with Jewish groups in the past - he was forced to apologize for anti-Semitic comments he made to a Jewish police officer who arrested him for drink driving in Malibu, California, in 2006.
The movie star and director accepted his remarks were "vitriolic and harmful". (KL/WNWC/ZN)