The 61-year-old skipper orchestrated an impressive turnaround in Minnesota that saw the Twins jump from 59-103 and a fifth-place finish in the AL Central in 2016 to 85-77 and second in the division in 2017, including a berth in the postseason.
Minnesota became the first team in major league history to make the playoffs after losing 100-plus games the previous season.
It marks the third time a Twins skipper has won the award. Tom Kelly won it in 1991 and Ron Gardenhire won in 2010.
Molitor is only the second Hall of Famer to be named Manager of the Year, joining Frank Robinson, who won the award with the Baltimore Orioles in 1989.
Torey Lovullo of the Arizona Diamondbacks won the National League award. In his first full season as a big-league skipper, Arizona reached the playoffs a year after going 69-93.
Milwaukee Brewers manager Craig Counsell finished fourth in the National League balloting.