"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.
It seems he won for expected, future contributions. I am not an American but I support Obama in general, just as I supported Al Gore, very strongly, for his very specific actions. Still, I think the Nobel Peace Prize is losing relevance and am not sure if Gore, much less Obama, deserve the prize. As a more local example, I am concerned that Kim Dae-Jung won his prize by buying it - in giving the North Koreans so much.