The award will be presented at a New Zealand Music Awards ceremony in Auckland on October 8.
Devlin was honoured last year for his contribution to New Zealand rock'n'roll.
Straitjacket Fits singer, songwriter and guitarist Shayne Carter said yesterday he was both proud and surprised by the acknowledgment.
"I am naturally suspicious of awards, mainly because of all the great artists who never get acknowledged at those sorts of dos and, really, who is to say this is better than that? Music is such a subjective thing.
"Having said that, it's very nice for our band to be acknowledged like this. It's gratifying to think it had some lasting impact," he said.
"I don't mean to sound pompous but good music is like that. It'll always be good music no matter what era it's from . . . The true stuff has staying power."
Awards spokesman Campbell Smith, of the Recording Industry Association of New Zealand, said Straitjacket Fits' impact on New Zealand music was as significant as Devlin's.
"Straitjacket Fits really led the second wave of Dunedin sound in the late '80s. They're a perfect fit for the award.
"The effect these guys made on the New Zealand music scene was huge. They have inspired and influenced dozens of Kiwi bands," Smith said.
"The band were at the forefront of the new phase of the Flying Nun sound which took a bunch of mostly Dunedin bands to huge local popularity and on to the international stage.
"New Zealand has a fine history of powerful and melodic guitar bands. Straitjacket Fits was, and is, one of the best.
"It's perfect that we can acknowledge the band's place in this history with such an award."
Straitjacket Fits was formed in 1986 by Carter and John Collie, who had both played in another Dunedin band, the Double Happys.
They teamed up with David Wood to form the original line-up and were joined a year later by a second guitarist, singer and songwriter in Andrew Brough, of the Orange.
The group's first EP, Life in One Chord, featuring the seminal singles She Speeds and Down In Splendour, was released on Flying Nun Records in 1987 and spent 10 weeks in the NZ Top 50.
Influential British music magazine Melody Maker described the release "as necessary as dreaming".
Three of the group's songs are in the Australasian Performing Right Association Top 100 New Zealand songs of all time: She Speeds at No 9, Down In Splendour at No 32 and later release If I Were You at No 88.
A move to Auckland in 1988 preceded the release of debut album Hail, the first of three.
By the time of second album Melt, the band had signed with American major label Arista.
The band line-up changed following a 1991 US tour and Brough was replaced by Mark Peterson before the 1992 release of the Done EP, which reached No 11 on the New Zealand Top 40 singles chart.
The band moved to California in 1993 to produce its third album, Blow, which produced a couple of notable singles Cat Inna Can and If I Were You - with the album reaching No 12 on the New Zealand charts and also being released in the US, Australia and Europe.
Despite all the critical acclaim, Straitjacket Fits went into semi-permanent retirement in 1994, though it reformed briefly in 2005 for a series of concerts throughout New Zealand.
Carter says the recognition that has arrived more than two decades after the band was formed is somewhat bittersweet.
"The recording industry in New Zealand never really believed in us until we got overseas and started getting recognition there.
"We have never been played by commercial radio here, either. Moan, moan, gripe, gripe.
"But like I say - something like this is a nice balance to all that. I'm glad our band has kind of got its due."
