The award was granted for the song 'What A Beautiful Name,' which she wrote for Hillsong Church.
She has performed with her husband as part of the church's Los Angeles core leadership team under the name Brooke Ligertwood since 2008.
Fraser is best known in New Zealand for her hits 'Something In The Water' and 'Deciphering Me'.
This is Fraser's first Grammy Award.
'What A Beautiful Name' has had 112 million views on YouTube.
The song won out over competing tracks from Casting Crowns, Natalie Grant, and MercyMe.