This 2026 Nobel Peace Prize underlined the importance of maintaining an organised international order, the committee said in its citation.
"The system of international law is under tremendous pressure, and its institutions are under attack," it said on Friday.
"We see a shift towards power politics at the expense of legal frameworks and global respect for law and justice. Whenever might overtakes right, it undermines stability, trust and peaceful co-existence."
Joergen Watne Frydnes, chair of the Norwegian Nobel Committee said Pillay's work "is a source of hope and inspiration to all those who seek to bring about a more peaceful world".
Pillay, 85, received the news while attending the Nuremberg Forum, a gathering to discuss international law in Nuremberg, Germany, the location of the trials of Nazi war criminals that helped lay the foundations of international law.
"Firstly, at this venue, your applause means a great deal to me," she said to a standing ovation.
"You know, you don't want to receive an award, prize or anything unless the public agrees that you deserve this."
And joking, she added: "But being a lawyer and a judge, I still want to verify this information."
Born in Durban, in South Africa's Natal province, in a family of Indian Tamil origin, Navi Pillay, 85, has been a judge on several international courts, including the International Criminal Court and the International Criminal Tribunal for Rwanda.
She was also chair of the UN Commission of Inquiry on the Occupied Palestinian Territory that concluded in 2025 that Israel has committed genocide in Gaza. Israel dismissed the report as "scandalous".
She has also served as United Nations High Commissioner for Human Rights.
In 1967 she became the first woman to start a law practice in Natal and the first non-white woman to serve on South Africa's High Court.
Pillay is currently serving as an ad hoc judge at the International Court of Justice, the highest court of the United Nations, in the ongoing case against Myanmar, which is accused of committing genocide against the Rohingya minority group.
Pillay held states and national leaders accountable and brought hope to victims of violence and conflict, and demonstrated a firm moral compass in her long career, the committee said.
"A common thread runs from her early work defending Nelson Mandela and others who stood up against apartheid to her service as a judge in some of the key international court cases of our time," the citation said.
The Hague-based ICC has been the target of an escalating campaign by US President Donald Trump, who in September urged countries to leave it.
Washington has already imposed targeted sanctions on several prosecutors and judges at the court and, according to sources, is considering wider sanctions in retaliation for the targeting of Israeli leaders.
The committee was not directly criticising Trump by rewarding Pillay, according to Haakon Gjerloew, acting director of the Peace Research Institute Oslo.
"I think it's generally rather a promotion of an international legal world order. Of course, he might react to someone who has been part of the ICC, but it's not a direct attack on Trump," Gjerloew said.
The peace prize is the fifth Nobel awarded this week, after literature, chemistry, physics and medicine. Venezuelan opposition leader Maria Corina Machado won in 2025.
The Nobel Peace Prize, worth 12 million Swedish crowns, or about $A1.7 million, is due to be presented in Oslo on December 10, the anniversary of the death of Swedish industrialist Alfred Nobel, who founded the awards in his 1895 will.
with AP
