The 30-year-old has been named on a six-strong shortlist after winning double gold over 5,000m and 10,000m at last year's World Championships in Moscow.
The titles add to the two medals he won in the same events at the London 2012 Olympics.
Made up of 46 of the greatest sportsmen and sportswomen of all-time, the Laureus World Sports Academy is responsible for voting for the overall winner.
Sprinter Usain Bolt, winner of the award three times previous, is up against Farah alongside Radael Nadal, Cristiano Ronaldo, Sebastian Vettel and LeBron James with the winner announced in a ceremony in Kuala Lumpur on March 26.
Farah's nomination came on the same day the athlete announced he will contest the New York City half-marathon on March 16 as part of his preparations for the London Marathon in April.
"I can confirm that I will run the NYC Half on 16 March as part of my build-up to the London Marathon in April," said Farah.
"It will be my second time to compete in this event, after my win there in 2011. I have been training hard in Kenya and hope to use the New York race to gauge my fitness one month out from my 26.2-mile debut."
� Sportsbeat 2014