Spencer, a Mississippi native, was presented the Thomas Wolfe Medal for her contributions to writing in the humanities.
The author of nine novels, seven collections of short stories, a memoir and a play, Spencer said after her speech that she finds inspiration in many places.
"I draw from whatever is interesting to write down," she said.
A visiting professor of creative writing at UNC from 1986-92, Spencer recently published a new book, "The Southern Woman: New and Selected Fiction."
The ceremony, hosted by the Thomas Wolfe Society, the Morgan Writer-in-Residence Program and the UNC Department of English, was the third award given since the inception of the prize in 2000.
"If the Mississippi River could write, it would be what Elizabeth Spencer writes," said Lawrence Naumoff, a UNC professor of creative writing and novelist who attended Thursday's event.
Caitlin Doyle, the Thomas Wolfe Scholarship recipient, showed the medal to the audience before bestowing it on Spencer to the flash of a camera.
The gold medal with Wolfe's portrait hung around Spencer's neck on a Carolina blue ribbon in striking contrast to the autumnal colors of the velvet curtain behind her and the flowers at the foot of the podium.
As she fingered the medal during her lecture, she spoke of her own happy childhood memories of summer vacations in the mountains of North Carolina, where she and her family escaped the oppressive heat of a Mississippi summer.