The star was given the honour in a special ceremony on Monday (July 11) at Lord Mayor Clover Moore's office in recognition of her support of the gay, lesbian, bisexual and transgender community.
Clover Moore said afterwards, 'Lady Gaga has been a powerful force for the gay and lesbian community in Sydney and we have a rare honour for people whose achievements embrace the ideals and spirit of our city.'
She added, 'There are many young gay and lesbian people in Sydney, more than anywhere else in Australia, and unfortunately many are made to feel like second-rate citizens because there is still so much inequality.
'One woman has helped turn the tide in the United States, from playing small bars in New York to huge arenas around the world.
'And I would like to pay tribute to her for using her star power to focus the world's attention on the prejudice still directed at gay men and women.'