"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," Jagland said. "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."
The committee said it attached special importance to Obama's vision of, and work for, a world without nuclear weapons.
Obama's election and foreign policy moves caused a dramatic improvement in the image of the US around the world. A 25-nation poll of 27,000 people released in July by the Pew Global Attitudes Project found double-digit boosts to the percentage of people viewing the US favorably in countries around the world. That indicator had plunged across the world under US president George W. Bush.
"Obama has as president 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," the committee said.
Unlike the other Nobel Prizes, which are awarded by Swedish institutions, he said the peace prize should be given out by a five-member committee elected by the Norwegian Parliament. Sweden and Norway were united under the same crown at the time of Nobel's death.
The committee has taken a wide interpretation of Nobel's guidelines, expanding the prize beyond peace mediation to include efforts to combat poverty, disease and climate change.
Archbishop Desmond Tutu of South Africa, who won the prize in 1984, said Obama's award shows great things are expected from him in coming years.
"It's an award coming near the beginning of the first term of office of a relatively young president that anticipates an even greater contribution towards making our world a safer place for all," Tutu said. "It is an award that speaks to the promise of President Obama's message of hope."
Obama is the third sitting US president to win the award: US president Theodore Roosevelt won in 1906 and president Woodrow Wilson was awarded the prize in 1919.