The "Confucius Peace Prize" will be awarded on Thursday to former Taiwan Vice-President Lien Chan, one of its organisers, Tan Changliu, told AFP.
Tan declined to give details about who was behind the award but denied that his group had any link with China's government.
However, the prize will be awarded just one day before the Nobel Peace Prize ceremony in Oslo to honour jailed Chinese dissident Liu Xiaobo and comes as China has stepped up already fierce criticism of the Nobel Committee.
Deeply embarrassed that the committee honoured a man opposed to its one-party rule, Beijing has placed Liu's wife Liu Xia under house arrest, warned other countries not to attend the ceremony and said ties with Norway would suffer.
On Tuesday, a Chinese government spokeswoman referred to members of the Nobel Committee as "clowns" and said most of the world opposed Liu's award -- a claim rejected by the committee.
Tan said the Confucius Peace Prize features a cash award of 100,000 yuan (15,000 dollars).
There was so far no indication Lien would come to receive the prize, he said.
"We have contacted Lien Chan but as of now we have no news on whether he would come himself," he said.
Lien, who also is honorary chairman of Taiwan's ruling Kuomintang party, has served as an unofficial interlocutor between Beijing and Taipei in the absence of official ties.
The two sides split after a civil war won by Mao Zedong's Communists in 1949 but relations have dramatically improved in recent years.
Tan declined to give further information. The award was announced on a Buddhist Chinese website.
Lien's spokesman Ting Yuean-chao told AFP his office had received no word on the prize and would not comment.
Liu, a writer and academic who has boldly fought for human rights and reform of China's one-party political system for more than two decades, was jailed in December 2009 for 11 years on subversion charges.
He was announced as the Nobel winner in October but no one is expected to be on hand to accept the award on his behalf as many of Liu's fellow dissidents and supporters have been warned not to attend or have been physically prevented from leaving China, activists have said.