auszeichnen
to award
To honor someone for a special achievement with a prize, medal, or certificate.
Die Autorin wurde für ihren neuen Roman mit dem Deutschen Buchpreis ausgezeichnet.
The author was awarded the German Book Prize for her new novel.

to award / to distinguish
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to award
To honor someone for a special achievement with a prize, medal, or certificate.
Die Autorin wurde für ihren neuen Roman mit dem Deutschen Buchpreis ausgezeichnet.
The author was awarded the German Book Prize for her new novel.

'Auszeichnen' is a separable verb. The prefix 'aus-' goes to the end of the main clause. In subordinate clauses and in the infinitive, the verb stays together.
Der Bürgermeister zeichnet die Gewinner persönlich aus.
The mayor personally awards the winners.
The verb consists of 'aus-' and 'zeichnen' (to draw/mark). Literally, it means something like 'to mark out' or 'to highlight'. This idea fits all meanings: you highlight someone through an award, a quality makes a product stand out, or you highlight the price on the goods.
Dieses Modell zeichnet sich durch besondere Sparsamkeit aus.
This model distinguishes itself by its exceptional efficiency.
The grammatical form helps you recognize the meaning: the honoring sense (m01) often appears in the passive ('wurde ausgezeichnet' — was awarded). A quality (m02) is always expressed reflexively ('sich auszeichnen' — to distinguish itself). Attaching prices (m03) is usually in the active voice with an object such as 'Ware' (goods).
Er wurde für seinen Mut ausgezeichnet.
He was awarded for his courage.
When someone is honored, the passive construction is very common: 'Jemand wird (mit etwas) (für etwas) ausgezeichnet' (someone is awarded/honored with something for something). The preposition 'mit' names the prize, and 'für' names the reason.
Die Forscherin wurde mit dem Nobelpreis für ihre Entdeckungen ausgezeichnet.
The researcher was awarded the Nobel Prize for her discoveries.
To describe a special quality, the verb is always used reflexively and with the preposition 'durch' (+ accusative). The structure is: 'Etwas zeichnet sich durch eine Eigenschaft aus' (something distinguishes itself by a quality).
Das Hotel zeichnet sich durch seinen exzellenten Service aus.
The hotel distinguishes itself by its excellent service.
to lend / award / give
'auszeichnen' and 'verleihen' can both occur with prizes, titles, or honors. 'Auszeichnen' puts the person and their special achievement at the center: someone is honored for something. 'Verleihen' emphasizes the official act more: a prize, medal, or title is given to someone. Learners may confuse the words because they often appear in the same situation. The natural pattern is: a person is 'ausgezeichnet', but a prize is 'verliehen'.

Die Schule zeichnete Anna für ihr soziales Engagement aus.
The school honored Anna for her social commitment.
Die Stadt verleiht den Preis jedes Jahr an besonders aktive Jugendliche.
The city awards the prize every year to especially active young people.