The prize committee compared the 82-year-old author to Anton Chekhov, the 19th century Russian who is considered one of the greatest short story writers in history.
She's the first Canadian-based writer to win the literature award. Saul Bellow, who won it in 1976, was born in Quebec but moved to the United States as a child and is regarded as a U.S. author.
Munro is the 13th woman to receive the literature prize.
"On behalf of all Canadians," Canadian Prime Minister Stephen Harper said in a tweet, "congratulations to Alice Munro."
After the prestigious award was announced, the Nobel committee said on Twitter that it hadn't been able to contact Munro and left a phone message to tell her the good news. But The Canadian Press contacted her, and she was quoted as saying the award was "quite wonderful" and she was "terribly surprised."
"I knew I was in the running, yes, but I never thought I would win," she said, according to a Toronto Star story quoting The Canadian Press.
Doug Gibson, Munro's publisher, spoke to CNN affiliate CTV and read a statement on the author's behalf.
"I am amazed and very grateful. I am particularly glad that winning this award will please so many Canadians. I'm happy that this will bring more attention to Canadian writing," she said, according to Gibson.
Few more points about Alice Munro,
She writes about "ordinary Canadian people" and "turns it into magic," publisher says.
Canada's prime minister congratulates Munro.
A story from one of her collections is the basis of a film.
Munro, who lives in southwestern Ontario, is compared to Anton Chekhov.
Click here to view the winner of Nobel Peace Prize for 2013
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