The committee praised the 27-nation EU for rebuilding after World War Two and for its role in spreading stability to former communist countries after the fall of the Berlin Wall in 1989.
"The union and its forerunners have for over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe," Nobel Committee president Thorbjoern Jagland said in Oslo.
"Over a seventy-year period, Germany and France had fought three wars. Today war between Germany and France is unthinkable. This shows how, through well-aimed efforts and by building up mutual confidence, historical enemies can become close partners," he added, explaining this
year's prize decision.
The prize, worth $1.2 million, will be presented in Oslo on December 10.
Giving the award to an organization is not unprecedented. Something called the International Peace Bureau won all the way back in 1910, and other past recipients include the International Red Cross, Doctors With Borders, and UNICEF.
However, the 2012 award is likely to go down as one of the questionable choices, like the awards for former Palestinian president Yasser Arafat, former US secretary of state Henry Kissinger, the International Atomic Energy Agency (after the the US had already gone to war in Iraq), and US President Barack Obama, who won after less a year in office as President.
Image: European Union member states' flags flying in front of the building of the European Parliament in Strasbourg | Photograph: Vincent Kessler/Reuters