The movie's story goes back to the 1950s and features the life of the eldest son of a family who tries to find answers to the meaning of life and the relationship with God.
Malick said he conceived the script for 30 years before realising it through the movie that reflects a life in two hours and 18 minutes.
Bill Pohlad, producer of the film, represented the film-making team on stage.
"Tonight I have to take the place of a giant. Terrence Malick is very shy and discreet. 'The Tree Of Life' was a long journey, but it was all worth it. I would like to thank especially the Festival de Cannes," Pohlad said after receiving the prize from actress Jane Fonda.
The Best Director Award went to Denmark film-maker Nicholas Winding Refn for "Drive" - a story about a Hollywood stunt driver.
American actress Kirsten Dunst took home the Best Actress Award for "Melancholia".
Jean Dujardin, a 39 years-old French actor, won the Best Actor Award for "The Artist" - a film that pays homage to the era of silent movies.
The Jury Prize went to French director Maiwenn for her film " Polisse" and the Grand Prize was shared by films "Bir Zamanlar Anadolu'da" ("Once upon a time in Anatolia") by Nuri Bilge Ceylan and "Le Gamin au Velo" ("The Kid with a Bike") by Jean-Pierre et Luc Dardenne.
The Cannes film festival began May 11. A total of 21 movies were in the competition for the Golden Palm.