"Most of Transtroemer's poetry collections are characterised by economy, concreteness and poignant metaphors. In his latest collections ... Transtroemer has shifted towards an even smaller format and a higher degree of concentration," the Swedish Academy added.
Transtroemer's reputation in the English-speaking world owes much to his friendship with American poet Robert Bly, who has translated much of his work into English.
His poems have appeared in 50 languages.
His introspective style is described by Publishers Weekly as "mystical, versatile and sad".
Transtroemer, who is also a psychologist, has worked with the disabled, convicts and drug addicts.
After publishing 10 volumes of poetry, Transtroemer suffered a stroke in 1990 which affected his ability to talk.
He will receive the 10 million Swedish kronor (1.08 million euros) award at a gala ceremony in Stockholm on 10 December 10, the anniversary of the 1896 death of the prize creator, Swedish industrialist Alfred Nobel.
Last year’s Nobel Literature Prize went to Spanish-Peruvian author Mario Vargas Llosa.