The Oxford City Council removed the honour, the Freedom of Oxford, awarded to Aung San Suu Kyi, because of her response to the Rohingya crisis.
The de facto leader of Myanmar was granted the honour in 1997 for her "long struggle for democracy".
But a motion to Oxford City Council said it was "no longer appropriate" for her to hold it, reports BBC.
More than half a million Rohingya Muslims have fled Myanmar to Bangladesh following recent violence.
The trouble erupted on 25 August when Rohingya militants attacked security posts, triggering a military crackdown.
Suu Kyi spent years under house arrest in Rangoon as a campaigner for democracy while Myanmar (formerly Burma) was ruled by a military dictatorship.
She became a worldwide figurehead for freedom before leading her National League for Democracy party to victory in open elections in November 2015.
But her failure to denounce the military or address allegations of ethnic cleansing has been criticised by world leaders and groups like Amnesty International.
Other organisations are now reconsidering honours given to Suu Kyi, BBC world affairs editor John Simpson said.
"I think it is perfectly natural to look around for ways of saying we disapprove utterly of what you are doing," he said.
Oxford City Council leader Bob Price supported the motion to remove her honour and confirmed it was an "unprecedented step" for the local authority.
People are "absolutely appalled" by the situation in Myanmar, he said, adding it was "extraordinary" she had not spoken out about reported atrocities in the country.
Last week it emerged St Hugh's College, Oxford, had removed a portrait of Suu Kyi from display.