Ahtisaari's work in Namibia, Kosovo, Northern Ireland and Central Asia contributed to the "fraternity between nations," the Swedish foundation said in a release.
Ahtisaari's work to resolve international conflicts spanning 30 years drew praise from the Norwegian Nobel Committee, which called him "an outstanding international mediator" in the citation.
"Through his untiring efforts and good results, he has shown what role mediation of various kinds can play in the resolution of international conflicts," the citation read.
Ahtisaari, selected from 197 nominations, told Norwegian broadcaster NRK he was "very pleased and grateful" to receive the award, The Daily Telegraph reported.
Ahtisaari will receive the prize -- a gold medal, certificate and $1.42 million -- in Oslo Dec. 10, the anniversary of the death in 1896 of Swedish inventor Alfred Nobel, the prizes' founder.