Professor Torrance has been honoured with a Knights Bachelor (Kt) for "services to Higher Education and Theology".
Professor Torrance served as Moderator of the General Assembly in 2003-04 and has been the Pro Chancellor of the University of Aberdeen since 2013.
A former Territorial Army Chaplain, Professor Torrance was ordained as a minister of Northmavine Parish Church, Shetland in 1982, a position he held until 1985 when he first moved into academia at Queen's College and then the University of Birmingham.
Professor Torrance, whose father Very Rev Thomas F Torrance was Moderator in 1976-77, has also been recognised for his work on interfaith dialogue with Jewish and Islamic communities.
Very Rev Dr John Miller, Moderator of the General Assembly in 2001-02, said: "It is very unusual to find a church minister exercising these gifts both in the church and in society at large.
"Iain has been influential through his work as a Chaplain working on the importance of moral values in military training.
"He has been valued in the university sphere, as Professor of Theology and as an administrator when Dean of the Faculty of Arts in Aberdeen."
Professor Sir Ian Diamond, Principal and Vice-Chancellor of the University of Aberdeen – where Professor Torrance first started teaching in 1993 - welcomed the news.
"Professor Torrance has made an enormous and outstanding contribution to higher education, both as one of the UK's leading theologians and also as a university leader in Scotland and in Princeton, USA," he said.
"We are hugely privileged to have him as our Pro Chancellor."
The 68-year-old is married with two children.