The four-year-old, owned and bred by Khalid Abdulla and trained by Henry Cecil, was retired unbeaten last month after winning 14 races.
Frankel, who accumulated almost £3 million in earnings, becomes only the second horse to win the award twice, after Ouija Board's 2004 and 2006 triumphs.
"Frankel, with his brilliance, has captured the hearts of so many people, some of whom have never been racing in their lives," said trainer Cecil.
The colt capped his career with victory in the Champion Stakes at Ascot last month.
The Cartier awards are determined through a combination of points earned by horses in top-class races, the opinions of a panel of racing journalists, and votes from readers of the Racing Post and the Daily Telegraph.
Earlier this month Frankel moved to his new home at Banstead Manor Stud near Newmarket, where he will be the most sought-after stallion in Britain when the covering season begins in mid-February.
Prince Khalid will send a significant number of his own mares to be covered by Frankel, but the horse will also be available to service mares owned by other breeders, at a fee expected to approach £100,000 pounds, reports say.