The committee highlighted Mr Obama's efforts to strengthen international bodies and promote nuclear disarmament.
There were a record 205 nominations for this year's prize. Zimbabwe's prime minister and a Chinese dissident had been among the favourites.
The laureate - chosen by a five-member committee - wins a gold medal, a diploma and 10m Swedish kronor ($1.4m).
 | KEY RECENT WINNERS 2008: Martti Ahtisaari 2007: Intergovernmental Panel on Climate Change, Al Gore 2002: Jimmy Carter 2001: UN, Kofi Annan 1994: Yasser Arafat, Shimon Peres, Yitzhak Rabin 1993: Nelson Mandela, FW de Klerk 1991: Aung San Suu Kyi 1990: Mikhail Gorbachev 1989: Dalai Lama  |
"Only very rarely has a person to the same extent as Obama captured the world's attention and given its people hope for a better future," the Norwegian committee said in a statement.
"His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world's population."
Asked why the prize had been awarded to Mr Obama less than a year after he took office, Nobel committee head Thorbjoern Jagland said: "It was because we would like to support what he is trying to achieve".
"It is a clear signal that we want to advocate the same as he has done," he said.
He specifically mentioned Mr Obama's work to strengthen international institutions and work towards a world free of nuclear arms.
The statement from the committee also said the US president had "created a new climate in international politics".
"Multilateral diplomacy has regained a central position, with emphasis on the role that the United Nations and other international institutions can play," it said.
The committee added that the US was now playing a more constructive role in meeting "the great climatic challenges" facing the world, and that democracy and human rights would be strengthened.
Source: http://news.bbc.co.uk/2/hi/europe/8298580.stm
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