ICAN describes itself as a coalition of grassroots non-government groups in more than 100 nations. It began in Australia and was officially launched in Vienna in 2007.
"We live in a world where the risk of nuclear weapons being used is greater than it has been for a long time," said Berit Reiss-Andersen, the leader of the Norwegian Nobel Committee.
Reiss-Andersen honored the Geneva-based group "for its work to draw attention to the catastrophic humanitarian consequences of any use of nuclear weapons and for its ground-breaking efforts to achieve a treaty-based prohibition of such weapons."
The statement said that "through its inspiring and innovative support for the UN negotiations on a treaty banning nuclear weapons, ICAN has played a major part in bringing about what in our day and age is equivalent to an international peace congress."
Asked by journalists whether the prize was essentially symbolic, given that no international measures against nuclear weapons have been reached, Reiss-Andersen said that "what will not have an impact is being passive."
In July, 122 nations adopted a UN Treaty on the Prohibition of Nuclear Weapons, but nuclear-armed states including the United States, Russia, China, Britain and France stayed out of the talks.
The Nobel prize seeks to bolster the case of disarmament amid nuclear tensions between the United States and North Korea and uncertainty over the fate of a 2015 deal between Iran and major powers to limit Tehran's nuclear programme.
US President Donald Trump has called the Iran agreement the "worst deal ever negotiated" and a senior administration official said on Thursday that Trump is expected to announce soon that he will decertify the landmark pact.