Ertl's achievement was to build a step-by-step method to progressively build up a complete picture of a chemical reaction on a surface.
His experiments require a laboratory that is free of contamination and able to apply individual layers of atoms and molecules to a pure surface.
"His insights have provided the scientific basis of modern surface chemistry: his methodology is used in both academic research and the industrial development of chemical processes," the academy said in a statement.
The science can also explain why the ozone layer is deteriorating, through chemical reactions on the surfaces of ice crystals in the stratosphere.
Knowledge about chemical reactions on surfaces will also help scientists produce renewable fuels more efficiently and create new materials for electronics, the jury said.
Last year, Roger Kornberg of the United States won the prize for work on genetic transcription, a process important for coaxing stem cells into different kinds of specific cells, sparking hope that scientists will one day be able to grow transplant tissue in a lab.
The formal prize ceremony will be held as on December 10, the anniversary of the death in 1896 of the prize's creator, Swedish industrialist and inventor of dynamite, Alfred Nobel.
The prizes were first awarded in 1901.