Wearing a traditional Palestinian dress and black veil, Hroub was hailed by world leaders at the ceremony for the Nobel-style award, set up two years ago by the Dubai-based Varkey Foundation.
Detailed in her book "We Play and Learn", Hroub's approach has "led to a decline in violent behaviour in schools where this is usually a frequent occurrence," the foundation said in a statement.
"We can teach children to be effective and inventive through various contexts which include entertainment, drawing and movement," Hroub said after she was awarded the prize.
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"We need to help children with questioning, dialogue, thinking and feeling to help them express themselves."
Video messages from Pope Francis, UN Secretary General Ban Ki-moon, US Vice President Joe Biden, Britain's Prince William and Microsoft founder Bill Gates were broadcast at the ceremony.
The foundation, set up by Dubai-based education entrepreneur Sunny Varkey, is paid in instalments and requires the winner to remain a teacher for at least five years.
In a statement, Varkey said he hoped Hroub's story "will inspire those looking to enter the teaching profession and also shine a powerful spotlight on the incredible work teachers do all over Palestine and throughout the world every day."