Munro, the 13th woman to win the literature award, was called the "master of the contemporary short story" by the academy in a release.
Munro is acclaimed for her well-honed storytelling that is punctuated by clarity and psychological realism, the academy said.
Munro, 82, was born in Wingham, Ontario, and lives in Clinton near her childhood home.
She began writing stories as a teenager and published her first book-length work in 1968, the short-story collection "Dance of the Happy Shades."
In 1971 she published a collection of stories, "Lives of Girls and Women," which critics have described as a Bildungsroman, or a novel of all-around self-development.
Her most recent collection of short stories is "Dear Life," published last year.
The 2001 collection "Hateship, Friendship, Courtship, Loveship, Marriage" was the basis of the 2006 film "Away from Her," directed by Sarah Polley.
Notable deaths of 2014 [PHOTOS]
Ebola health workers killed in Guinea