The South Africa-born Pillay, 85 years old, was recognised for her efforts to promote peace and international law, said Joergen Watne Frydnes, chair of the Norwegian Nobel Committee.
Pillay's work "is a source of hope and inspiration to all those who seek to bring about a more peaceful world", Watne Frydnes said announcing her win on Friday.
He said the committee had not yet been able to reach Pillay to inform her she had received the peace prize, which is often considered the most prestigious honour on the planet.
"At a time when the number of wars and conflicts is rising, and when judges and institutions of international law are under political attack, the Nobel Committee wishes to issue a reminder that the ability to resolve conflicts without force or violence is dependent on the international rule of law," the committee wrote in a news release on Friday.
"An international legal system in which war criminals are held to account and the victims of abuse see justice served is a precondition for a peaceful world."
The Norwegian Nobel Committee in Oslo received nominations for 287 candidates for the prize, and just more than a quarter of them were organisations.
Experts say the committee typically focuses on the durability of peace, the promotion of international fraternity and the quiet work of institutions that strengthen those goals.
In 2025, Venezuelan opposition leader Maria Corina Machado won the Nobel Peace Prize for her struggle to achieve a democratic transition in the South American nation, winning recognition as a woman "who keeps the flame of democracy burning amid a growing darkness".
Machado gave Trump her Nobel medal shortly after the United States ousted then-president Nicolas Maduro.
But it was largely a symbolic gesture: the Nobel Committee has said the honour itself cannot be transferred.
Nominations can be made by a select group of people and organisations, including heads of state or politicians serving at a national level, university professors, directors of foreign policy institutes, past Nobel Prize recipients and members of the Norwegian Nobel Committee itself.
Four of the 2026 Nobels were announced this week.
The Nobel for medicine went to three scientists whose work led to a tool that uses light to help unravel how the brain works.
The physics award recognised a scientist's efforts to demystify a rare group of neutrinos.
The chemistry prize recognised two scientists for untangling mysterious mirror images in molecules, a discovery that has been used to develop countless drugs.
Canadian poet, essayist and translator Anne Carson won the literature prize Thursday for "bold and inventive" works that fuse the classical and the modern and blur the boundaries of poetry and prose.
The Nobel Memorial Prize in Economic Sciences will be announced on Monday.
The prize money this year is 12 million Swedish kronor ($A1.7 million), whether for an individual, small group of laureates or organisation.
The year 2026 marks the 125th anniversary of the peace prize, which so far has gone to 112 individuals and 28 separate institutions since its inception in 1901.
The Red Cross has won three times and the UN refugee agency twice.
The prize has gone unawarded on 19 occasions, most of them during the world wars.
with Reuters
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