Previously little-known, the Hague-based Organisation for the Prohibition of Chemical Weapons has emerged from the shadows in recent months with its inspectors called in to verify Syria's claims of destroying its chemical arsenal.
UN Secretary General Ban Ki-moon said on Friday the award highlights the ongoing threat from chemical weapons.
"Far from being a relic of the past, chemical weapons remain a clear and present danger," Ban said.
"From the battlefields to the laboratories to the negotiating table, the United Nations is honoured to work hand-in-hand with the OPCW to eliminate the threat posed by chemical weapons for all people and for all time."
US Secretary of State John Kerry said the prize recognised the "extraordinary steps" taken by OPCW workers in Syria.
"The Nobel Committee has rightly recognised their bravery and resolve to carry out this vital mission amid an ongoing war in Syria," Kerry said in a statement.
The head of the UN weapons inspection team working with the OPCW in Syria said the prize would help boost the group's efforts to enforce chemical arms bans and dismantle stockpiles.
"It's really great," Ake Sellstrom told Swedish public broadcaster SVT.
"This is a powerful pat on the back that will strengthen the organisation's work in Syria."
Congratulations for the OPCW poured in from European capitals, with European Commission chief Jose Manuel Barroso calling the award "a powerful recognition of the important role of the OPCW in curbing the use of chemical weapons".
He promised the EU, which provides crucial funding to the OPCW, would continue to support the group as it "faces an unprecedented challenge in its current effort in Syria".
EU President Herman Van Rompuy said the OPCW's work was "invaluable for all of us as our shared aim is a chemical weapons free world".
In Paris, President Francois Hollande said the OPCW's win was a show of support for international efforts to destroy Syria's chemical weapons arsenal.
German Foreign Minister Guido Westerwelle called the prize a "well-deserved reward" for the OPCW's "long work and courageous commitment to disarmament".
There were some notes of caution however, with rights group Amnesty International urging foreign powers to not focus exclusively on chemical weapons in Syria.
"The recent deal in Syria was of course a positive step to remove banned chemical weapons from the battlefield, but we can't lose sight of the enormity of the human rights crisis in the country," Amnesty International Secretary General Salil Shetty said in a statement.
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