Wanaka Wastebusters general manager Sue Coutts said the grant would be used to take regional strategies about minimising waste-streams nationwide.
The grant recognised the great work of Wastebusters' employees and the "skills and knowledge which have been built in our local community," she said.
The success of the organisation's pioneering waste-reduction strategies, formulated when Wanaka Wastebusters was started a decade ago, could be replicated at a national level, Ms Coutts said.
A crowd of about 200 people gathered at Saturday's ceremony, which opened a day of carnival-themed celebrations at Wastebusters' Ballantyne Rd premises.
Minister for the Environment Nick Smith commended the community-backed organisation on its tenacity, foresight, and commercial nous.
Wanaka Wastebusters was at the forefront of a cultural change about the environmental benefits of recycling and waste-management, he said.
"What you have achieved in the past 10 years stands out nationally ... you are leaders in your field," he said.
Wanaka Wastebusters was founded on September 1, 2000 and has grown to be a significant commercial business and large employer in the Upper Clutha district.
The organisation, which returns all its profits to the community, has earned plaudits for its local strategies and support of national recycling campaigns such as eDay and Earth Hour.
The government grant will help Wastebusters fund its nationwide information campaign to help people choose products they can recycle or reuse.
"I am sure that the education activities, Enviroschools work and the community partnerships that have been developed over the last decade will ensure Wanaka Wastebusters continues to grow," Dr Smith said.
