Grant, boosted by her million-selling album "Unguarded," broke Patti's two-year hold on the artist of the year award.
She also won the honor in 1983, the only year since 1982 that Patti did not receive the award.
Grant, who was nominated for three other awards, has become the top gospel artist whose music has "crossed over" to the popular charts. The Nashville singer won her fourth Grammy award in February for "Unguarded."
Accepting the award Thursday night on Grant's behalf was Rowland Lundy, executive vice president for Word Inc., a Christian label for which she records. The Nashville singer was performing in Columbus, Ohio, and could not attend the ceremony.
The awards were announced in ceremonies broadcast live by the Christian Broadcasting Network and on a network of 127 stations.
"It means so very much to have the support of the people who do the same thing you do," Patti, of Anderson, Ind., told the audience at the Tennessee Performing Arts Center.
Larnelle Harris was named top male vocalist and won best inspirational album for ``I've Just Seen Jesus."
Glen Campbell won best secular album, awarded to an artist who does not normally perform gospel music, for ``No More Night."
"God opens doors for me," Campbell said. "If I just sit in the back seat and let him drive the wagon, good things happen for me."
Gloria Gaither was named gospel songwriter of the year, while "Via Dolorosa," written by Billy Sprague and Niles Borop, won best gospel song.
Producers William Joe Gaither and Randy Vader won the gospel music album of the year award in the worship and praise category for "I've Just Seen Jesus."
For gospel music album of the year in the musical category, the winners were producers Neal Joseph and Dawn Marsh for "Come Celebrate Jesus." In the children's music category, the winner was "Bullfrogs & Butterflys, Part II," Tony Salerno, producer.
The Black Contemporary Album award was won by the Winans for "Let My People Go." Shirley Caesar won the Black Traditional Album award for "Celebration."
Kent Hunter, Mark Tucker and Thomas Ryan won the award for Best Design for Grant's "Unguarded" album. Dino won the Instrumental Album of the Year award for "Regal Reign."
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