The award will be given by Uttar Pradesh Chief Minister Akhilesh Yadav at the inaugural UP Pravasi Diwas in Agra on January 4, according to a media release.
The UP Ratna award has been instituted to recognise the achievements and outstanding contributions of NRIs who hail from Uttar Pradesh, according to Sanjiv Saran, Principal Secretary in the State Government.
Mr Islam, an alumnus of Aligarh Muslim University (AMU) has supported a number of civic, educational and artistic causes and institutions.
Earlier this year, the foundation started by Mr Islam and his wife, Debbie Driesman - the Frank Islam and Debbie Driesman Foundation - pledged $2 million to AMU for the construction of a new school of management at the 140-year-old institution.
Other institutions and organizations that have received the support of the Foundation include University of Colorado, Montgomery College, and John F. Kennedy Centre for the Performing Arts, United States Institute of Peace (USIP) and Brookings Institution.
"I am profoundly grateful to Chief Minister Akhilesh Yadav and the Uttar Pradesh government for this honour," said Mr Islam, who was born in Azamgarh, describing the award as an "incredible honour."
"Uttar Pradesh is where my journey started. It is where I grew up and spent the formative years. I am humbled and delighted to be honoured by the state of Uttar Pradesh."
"I feel a strong connection to the past and future of UP," he said. "I felt a reaffirmation of purpose to strive to improve the educational conditions for those who are less fortunate and underprivileged."
He said, he felt "a sense of cautious optimism that we as concerned Indian Americans can make a positive and a meaningful difference by working together."
Mr Islam added, "I owe a sense of gratitude to (state's ruling Samajwadi Party chief) Mr Mulayam Singh Yadav for his leadership and his service to Azamgarh where I was born."
Mr Islam came to the US in the early 1970s to study at University of Colorado. He founded an information technology company, the QSS Company, in 1994 with him as the sole employee.
The company boasts of more than 2,000 employees on Tuesday and sales of $300 million before he sold it in 2007.
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