Demme, who will receive the prize on September 3rd, was described by Festival director Alberto Barbera as a member of "that generation of cinephile auteurs who revolutionized Hollywood in the Seventies" and who was capable of moving easily between studio and independent productions, and from fiction to documentary work.
The 71-year-old is a regular in Venice and is due to chair the jury for the Horizons world cinema section of this year's festival which runs September 2nd-12th in the city of canals.
Demme has made over 30 films in a career spanning five decades, including 1991's "The Silence of the Lambs," for which he won the best director Oscar, the acclaimed "Philadelphia" (1993) and "Married to the Mob" (1988).
His latest film, "Ricki and the Flash", starring Meryl Streep, was released in the United States earlier this month.
Last year's Visionary Talent award went to US actress Frances McDormand in recognition of her 30-year career.