The U2 frontman was awarded the honour during a brief ceremony at British ambassador David Reddaway’s official residence in Dublin.
Fellow band members The Edge and Adam Clayton joined the lead singer’s wife Ali and their four children — Jordan, Eve, Eli and John — for the reception.
Like Bob Geldof, he is technically not entitled to be called “Sir” as he is not a British citizen.
“By the way, you can call me pretty much anything you want, except sir,” he remarked, before suggesting suitable alternatives.
“You can call me lord of lords or a demi-god,” he said.
A letter to Bono from Prime Minister Tony Blair was read out to the small gathering, including artists Louis Le Brocquy, his wife Ann Madden and long-time friend artist Guggi, inside the official residence.
Mr Blair described the 46-year-old as an inspiration in the fight against global poverty. He said he was delighted he had accepted the award in recognition of his outstanding contribution to music and humanitarian work.
“I’ll leave it to others far more knowledgeable than me to talk about U2’s music — all I’ll say is that along with millions of others right across the world, I’m a huge fan,” he said.
Accepting the Most Excellent Order of the British Empire, Bono joked Blair had asked him about the second verse of his song Miracle Drug during their last meeting.
“It has been a great year for this award to happen in and it does feel like this country and Great Britain are closer than they have ever been.”
Mr Reddaway opened the informal ceremony around midday, joking that Bono’s family and friends might be disappointed that there was no swords or kneeling involved.
In a nod to his egocentric reputation, the rock star put his hand on the ambassador’s shoulder and remarked: “Please, I wasn’t expecting you to kneel.”
Bono said he was accepting the award on behalf of his wife, children, the other members of U2 and his closest friends. He said: “May the circle never be broken.”
Musicians Simon Carmody and Gavin Friday, long time U2 friend Reggie Manuel, who runs a record label for the band, and Ned O’Hanlon, producer of many of their music videos, were among those present.
The front man believes his new title — Knight Commander of the Most Excellent Order of the British Empire (KBE) — will help him secure talks with world politicians to advance the battle against Third World debt.
“An award like this actually really helps me get through a few doors I wouldn’t get through and that’s the truth, that’s the way the world is,” he said.