Bannister, who also received the honor in June, went at least six innings in all six of his starts in August. His record for the month was 4-1 and he held opponents to just a .266 average.
"He's somewhat of a rookie," manager Buddy Bell said, "but since I've been managing, he's the best pitcher I've been around."
The 26-year-old compiled a 2.90 ERA over 40 1/3 innings. He struck out 16 and walked nine.
On Aug. 17 against the A's, Bannister pitched a two-run, four-hit complete game, fueling the talk of a possible AL Rookie of the Year Award.
"I just continue to pitch the same way," he said. "I try not to let stuff like that affect me. Personal honors are always nice, but this team is really playing well and that's what's exciting."
In his start against the Twins on Aug. 7, Bannister pitched seven innings and allowed just one earned run in the win. He flummoxed the Twins' lineup when he faced them again on Sunday.
"Bannister was good, you don't realize, just because he's with the Royals doesn't mean he's not good," Twins center fielder Torii Hunter said after the game. "Bannister's a really good pitcher."
On the year, Bannister is 12-7 with a 3.16 ERA and 72 strikeouts.
After Bannister picked up the award in June, teammate Billy Butler earned the honor in July.
Boston's Dustin Pedroia (.346 average), Chicago's Josh Fields (nine home runs and 24 RBIs), and New York's Joba Chamberlain (0.00 ERA over 11 1/3 innings) also received votes.
Bannister will receive a specially designed trophy to commemorate his performance.
Leslie Parker is an associate reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.