The Swedish Academy said that Pamuk
''in the quest for the melancholic soul of his native city has discovered new symbols for the clash and interlacing of cultures.''
It is the first time the prestigious prize has been awarded to a Turkish author.
Of the five finalists, only the winner will be revealed; the other four names are kept secret for 50 years. Other contenders this year were reported to be Syrian author Adonis and American writer Phillip Roth.
Pamuk had been put on trial in his native Turkey earlier this year for insulting "Turkishness" for a reference in a Swiss interview to the massacre of Armenians during the 1915-20 period. The court subsequently dropped the charges .
The announcement coincides with the adoption by the French parliament of a bill making it a crime to deny that Armenians suffered "genocide" at the hands of the Turks, infuriating Turkey. The bill, which provides for a year in jail and a heavy fine, still needs approval from the Senate and president.
Turkey called the decision a "serious blow" to relations with France. It has already threatened economic sanctions.
Like the other Nobels, the Literature Prize comes with a cheque for 10 million kronors (1.37 million dollars or 1.07 million euros).
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