The Australian star, 55, is a global goodwill ambassador for the UNHCR, the UN refugee agency, and attended the ceremony at Guildhall on Friday, with a number of people with refugee backgrounds among her guests.
Speaking after the ceremony, Blanchett said: "I treasure this gift from a city and country with a history of offering welcome and opportunity.
"London is a melting pot, where people from around the world find a home.
"It has long provided sanctuary to those fleeing persecution, from the Huguenots centuries ago to people fleeing eastern Europe in the early part of 20th century and, more recently, to those escaping conflicts in Syria, Afghanistan, Ukraine, and beyond.
"For many refugees, London represents a new beginning - safety, hope and belonging after hardship and displacement. I accept the freedom in their honour."
She was nominated by former lord mayor of the city of London Sir William Russell and chairwoman of the board of governors of Guildhall School of Music and Drama, Emily Benn.
Blanchett has won two Oscars, for best supporting actress in 2005 for The Aviator and in 2014 she won the best actress gong for Woody Allen's Blue Jasmine.
She rose to fame with her role as Queen Elizabeth I in Elizabeth (1998) and starred in the Lord Of The Rings trilogy as Galadriel. Her other films include Ocean's 8, Carol, Notes on a Scandal and Tar.
She has also featured in a wide variety of theatre productions and was a co-director of the Sydney Theatre Company from 2008 to 2013 alongside her husband Andrew Upton.
Her additional accolades include Bafta awards and she is an Earthshot Prize council member, the environmental prize founded by the Prince of Wales.
Blanchett has also been awarded a Companion of the Order of Australia and in 2018 was named a recipient of the World Economic Forum's Crystal Award, for "her leadership in raising awareness of the refugee crisis".
Earlier this year, Blanchett also made her return to the London stage to star in a new adaptation of Anton Chekhov's The Seagull.
Chris Hayward, policy chairman of the City of London Corporation, said: "Cate Blanchett delivers performances of remarkable depth and authenticity, and, away from acting, she speaks with commendable passion and conviction on humanitarian issues and climate action.
"As the policy chairman of one of the UK's major funders of arts, cultural, and heritage activities, I am very pleased to offer my sincere congratulations to Cate on being admitted into the freedom today."
Sir William said: "Portraying Elizabeth I nearly 30 years ago, Cate's commanding presence on screen caught and held our attention, and she has been mesmerising and thrilling audiences ever since in leading roles in major films and stage productions, most recently The Seagull at our beloved Barbican in the City of London.
"Her freedom today, however, is as much about recognising her aims and achievements as a committed campaigner on humanitarian and environmental issues, as it is for her remarkable talents as an actor, director, and producer."
Benn said: "Cate Blanchett deserves her status as one of the world-leading actors of her generation, demonstrating a complete mastery of craft over the course of her career and, alongside her acting work, she has consistently stood up for her beliefs, lending her voice to social campaigns.
"Cate has served as an inspirational role model for a generation of acting students, including at Guildhall School of Music & Drama, and it has been a privilege and pleasure to welcome her to the Guildhall."
The Freedom of the City of London is a way of paying tribute to an individual's outstanding contribution to public life and is believed to have begun in 1237.
Past recipients include comedian, actor and writer Sir Lenny Henry, England football captain Harry Kane and choreographer and director Sir Matthew Bourne.
