The Johnnie Armstrong Sword, created by Kenneth Erik Moffatt in the Moffatt family workshops at Teviothead near Hawick, was selected for a gold award at the 101st Goldsmiths' Competition at Goldsmiths Hall.
The honour made the sword Britain's top piece of chasing and repoussé work for 2010.
Kenneth and his wife, Sara, travelled to London on Monday to receive the award after which followed an evening reception and the official opening of the Goldsmiths exhibition.
The weapon, which depicts the legend of infamous Border reiver Johnnie Armstrong, is to return to Scotland later in the year.
Kenneth spent more than 2,000 hours creating the new Scottish basket-hilted sword.
Fashioned and chased in yellow gold and silver, the pictorial narrative decorating the sword's basket guard illustrates the heroic 16th-century 'Ballad of Johnnie Armstrong'.
One of the most notorious of all Border reivers, Armstrong and his men were hanged without trial from the trees at Caerlenrig, Teviotdale, in 1530, by the young King James V.
Kenneth told TheSouthern this week he was delighted his work had been honoured.
"As a working goldsmith it can be very difficult to have your work represented and exhibited so well publicly – as soon as a piece is made it's usually quickly off into a client's private collection, which can make it difficult to have a representation of your work available," he said.
"I'm especially pleased and surprised with the degree of interest which has been shown in the sword and its subject – the 'Ballad of Johnnie Armstrong' – and a touring exhibition programme is now being planned and organised for the sword, with the primary intention being to promote the incredible wealth of the indigenous art and culture of the Anglo-Scottish Borders."