The Swedish academy, in awarding the $1.36m prize, said that Pamuk "has discovered new symbols for the clash and interlacing of cultures".
Pamuk, whose bestselling novels include My Name is Red and Snow, focuses his work on the clash between past and present, East and West, secularism and Islamism - problems at the heart of Turkey's struggle to develop as a nation.
The academy commended Pamuk for reflecting in his writing how "growing up, he experienced a shift from a traditional Ottoman family environment to a more Western-oriented lifestyle".
"I am very glad and honoured. I am very pleased," Pamuk told Sweden's Svenska Dagbladet newspaper.
"I will try to recover from this shock."
In January Pamuk had charges dropped against him by a Turkish court of "insulting Turkishness" after comments he made to a Swiss newspaper regarding the Armenian genocide and the killling of Kurds.
"One million Armenians and 30,000 Kurds were killed in these lands and nobody but me dares talk about it," Pamuk, 54, told the magazine in February 2005.
"This prize was not given because of Pamuk's books, it was given because... he belittled our national values for his recognition of the genocide"
Kemal Kerincsiz, nationalist lawyer
Pamuk's win drew mixed reaction in Turkey. While the country's culture minister, Atilla Koc, said he was delighted at the win, some said the award was political.
"This prize was not given because of Pamuk's books, it was given because... he belittled our national values for his recognition of the genocide," said Kemal Kerincsiz, a nationalist lawyer who helped bring charges against Pamuk.
The author's case led to heavy criticism of Turkey by the European Union, already closely monitoring the country's human rights record in its attempt for EU membership.
Pamuk had been charged under Turkey's article 301, which makes it illegal to insult the Turkish republic, parliament or any state organisation and can lead to a jail term of up to three years.
The award came as the French parliament passed a bill on Thursday making it a crime to deny the Armenian genocide, a step likely to damage relations between France and Turkey.
Turkey denies that about 1.5 million Armenians were killed as part of a genocide during the disintegration of the Ottoman Empire during the first world war, arguing that Armenian deaths were a part of general partisan fighting in which both sides suffered.