EU Commission President Jose Manuel Barroso
BBC
The European Union has been awarded the Nobel Peace Prize for six decades of work in advancing peace in Europe.
The committee said the EU had helped to transform Europe "from a continent of war to a continent of peace".
The award comes as the EU faces the biggest crisis of its history, with recession and social unrest rocking many of its member states, reports the BBC.
The last organisation to be given the award outright was Medecins Sans Frontieres, which won in 1999.
Announcing the award, Nobel committee president Thorbjoern Jagland acknowledged the EU's current financial problems and social unrest.
But he said the committee wanted to concentrate on the body's work over six decades of advancing "peace and reconciliation, democracy and human rights".
Jagland highlighted the EU's work in sealing the reconciliation between France and Germany in the decades after World War II.
And he praised the organisation for incorporating Spain, Portugal and Greece after their authoritarian regimes collapsed in the 1970s.
The EU's reconciliation work had now moved to Balkan countries, he said, and pointed out that Croatia was on the verge of membership.
Reacting to the award, EU Commission President Jose Manuel Barroso said on his Twitter feed: "It is a great honour for the whole of the EU, all 500 million citizens, to be awarded the 2012 Nobel Peace prize."
The BBC's Europe correspondent Matthew Price says the EU's achievements are clear, but the committee has picked a strange time to highlight them.
The eurozone crisis has made the EU look more divided and fragile than it has for decades, he says.
The Nobel committee has rarely shied away from controversy with its choice of winner.
US President Barack Obama won the award in 2009, despite leading a country that was fighting two separate wars.
And the choice of detained Chinese dissident Liu Xiaobo in 2010 enraged China, which made an official complaint to Norway.
This year's Nobel Prize for literature winner, Chinese writer Mo Yan, said on Friday he hoped Liu would be freed as soon as possible.