Houston's "One Bin for All" idea beat out 300 other cities in the Bloomberg Philanthropies Mayor's Challenge.
Houston got a $1 million finalist prize and also won the popular vote as fan favorite, which will bring in another $50,000.
Mayor Annise Parker says the prize money will fund the technology to create a system where Houston residents can throw all their garbage and recyclable items into one container without sorting them.
"There is no more basic city function than picking up the trash. If we can change how people view trash, if we can change how people think about recycling — making it easier and more convenient — we can not only save money for cities, but we can also reduce greenhouse gases, we can lower our operating costs."
And city officials say they could be able to divert as much as 75 percent of the waste currently going into landfills.
Right now, Houston's recycling rate is about 14 percent.
"While we do have curbside recycling, and single-stream recycling in some parts of the city, still it's struggling to achieve the level of recycling rates we'd like to see. We believe that we're a perfect place to prove this technology and then help other cities achieve the same thing."
Parker says the one bin plan will require council approval for a new sorting facility that could be built within the next two years.
Critics of the plan say the sorting facility could cost as much as $100 million and that expanding the city's current single-stream recycling would be more efficient and effective.