Machado, a 58-year-old industrial engineer who lives in hiding, was blocked in 2024 by Venezuela's courts from running for president and thus challenging President Nicolas Maduro, who has been in power since 2013.
"Oh my God ... I have no words," Machado told the secretary of the award body, Kristian Berg Harpviken, in a phone call which the Nobel Committee posted on social media.
"I thank you so much but I hope you understand this is a movement, this is an achievement of a whole society. I am just one person. I certainly do not deserve it," she added.
She later said, in an X post in English: "I dedicate the prize to the suffering people of Venezuela and to President Trump for his decisive support of our cause!"
Trump is a critic of Maduro and the United States is one of a number of countries that does not recognise his government's legitimacy.
A White House spokesman had earlier criticised the Norwegian Nobel Committee's decision to focus on Venezuela just days after Trump announced a breakthrough in talks to halt the fighting in the Gaza Strip between Israel and Hamas.
"President Trump will continue making peace deals, ending wars, and saving lives... The Nobel Committee proved they place politics over peace," White House spokesman Steven Cheung said in a post on X.
Maduro, whose 12 years in office have been marked by deep economic and social crisis, was sworn in for a third term in January this year despite a six-month-long election dispute, international calls for him to stand aside and an increase in the US reward offered for his capture.
"When authoritarians seize power, it is crucial to recognise courageous defenders of freedom who rise and resist," the Nobel Committee said in its citation.
Marco Rubio, now Trump's secretary of state, nominated Machado for the Peace Prize together with a group of US members of Congress in August 2024, when he was still a senator.
It was not immediately clear whether she would be able to attend the award ceremony in Oslo on December 10, the anniversary of the death of Swedish industrialist Alfred Nobel who founded the awards in his 1895 will.
Machado is the first Venezuelan to win the Nobel Peace Prize.
Her three adult children are living abroad for safety reasons.
The United Nations human rights office welcomed the award to Machado as a recognition of "the clear aspirations of the people of Venezuela for free and fair elections".
The head of the award committee, Joergen Watne Frydnes, said he hoped it would spur the Venezuelan opposition's work.
"We hope that the entire opposition will have renewed energy to continue the work for a peaceful transition from dictatorship to democracy," Frydnes told Reuters after the announcement.
The lead-up to this year's prize announcement was dominated by Trump's repeated public statements that he deserved to win the award.
"The democratic opposition of Venezuela is something that the US has been eager to support. So, in that sense, it would be hard for anyone to constitute this as an insult to Trump," said Halvard Leira, research director at the Norwegian Institute of International Affairs.
The United States has struck several vessels allegedly carrying drugs off the coast of Venezuela in recent weeks.
Trump has determined that the US is engaged in "a non-international armed conflict" with drug cartels, according to a document notifying Congress of its legal justification for deadly US strikes on boats off Venezuela.
Machado has publicly supported the US military operation, telling Fox Noticias last month the operation was "aimed at saving lives" in both countries.
