The Norwegian Nobel Committee said it was honoring Obama for "his extraordinary efforts to strengthen international diplomacy and cooperation between peoples," and for elevating the level of international engagement.
The decision was welcomed by other Nobel peace laureates, including Mikhail Gorbachev, the last Soviet Union leader, and Muhammad Yunus, the Bangladeshi economist who pioneered the concept of microcredit, The Times of London said.
"It's as much about what he will achieve as what he has already achieved," Yunus said. "It's a powerful message that the peace prize has given."
The Taliban, however, said in a statement Obama hasn't "taken a single step toward peace in Afghanistan" as it criticized the award announced in Oslo, Norway.
An aide to Iranian President Mahmoud Ahmadinejad told Middle East Online the country hoped the award would give Obama "the incentive to walk in the path of bringing justice to the world order. We ... hope that by receiving this prize he will start taking practical steps to remove injustice in the world."
Poland's Lech Walesa, also a Nobel Peace Prize laureate, expressed surprise at Obama's selection, calling it "too soon," Polish Radio reported.
"(He) is just starting, he still has to do something. But, they clearly predict something to come from him," said Walesa, co-founder of Poland's first independent labor union, the Solitary movement. "Sometimes, the Nobel committee encourages one to work harder."
Former Finnish President Martti Ahtisaari, last year's peace laureate, said he views the decision as "an important encouragement" for Obama to keep discussing issues on the world stage, CNN said.
International Atomic Energy Agency head Mohamed ElBaradei, the 2005 Peace Prize winner, said Obama deserved to win for his efforts to bring Iran to the table for direct nuclear talks with the United States.
"I could not think of anybody who is more deserving," ElBaradei said.