Scandinavia's most famous living poet, Transtroemer has been called a master of mysticism who often presents a dream-like consciousness in which time slows to allow for dissection of the relationship between the inner self and the surrounding world.
"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 jury added.
Transtroemer suffered a stroke in 1990 which left his speech slurred.
At a press conference Thursday, a smiling Transtroemer said receiving the accolade felt "very good." His wife, Monica, answered the other questions for him.
An amateur pianist, he plays the piano every day with his undamaged left hand and spends his mornings listening to classical music.
He was listening to music when Thursday's call came from the Swedish Academy.
The Academy's permanent secretary, Peter Englund, told Swedish television that Transtroemer had been nominated for the prize every year since 1993.
His work is "about death and history and memory, watching us, creating us, and that makes us important because human beings are sort of the prison where all these great entities meet," Englund told the nobelprize.org website.
"It makes us important, so you can never feel small after reading the poetry of Transtroemer," he said, adding that he was the first Swede to win a Nobel prize in 40 years.
"He has quite a small production really, you could fit it into a not-too-large pocket book, all of it. So he has a very fast and very well contained production. He is not a prolific author," Englund said.
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, one of 60 languages in which his poems have appeared.
His work paints simple pictures from everyday life and nature, as seen in this extract from the poem After a Death, translated by Bly: "Once there was a shock/that left behind a long, shimmering comet tail./It keeps us inside./ It makes the TV pictures snowy./ It settles in cold drops on the telephone wires."
Transtroemer's French translator, Jacques Outin, called him "the grand master of the metaphor."
"The Russian poet Joseph Brodsky, who won the Nobel in 1987 and who admired him, admitted he had borrowed several of his metaphors," he told AFP.
"He breathes wisdom and kindness," Outin added.
The Swede's introspective style, described by Publishers Weekly as "mystical, versatile and sad", is in contrast with Transtroemer's life, which shows a constant, active commitment to working for a better world -- and not just by writing poems.
In his parallel careers as psychologist and poet, he also worked with the disabled, convicts and drug addicts while, at the same time, producing a large body of poetic work.
His wife Monica told Swedish news agency TT her husband was surprised to win the prestigious accolade.
"He did not think he would get to experience this," she said.
Transtroemer's works have been translated into more than 60 languages.
His books of poetry include "The Great Enigma: New Collected Poems" (New Directions, 2006); "The Half-Finished Heaven" (2001); "New Collected Poems" (1997); "For the Living and the Dead" (1995); "Baltics" (1975); "Windows and Stones" (1972), an International Poetry Forum Selection and a runner-up for the National Book Award for translation; and "The Half-Finished Heaven" (2001).
Swedish Prime Minister Fredrik Reinfeldt hailed the choice of Transtroemer, saying he hoped it would increase reading in Sweden.
"I am happy and proud ... I know that many have hoped for this for a long time," he said.
Just minutes before Thursday's announcement, Serbia's state-run RTS television erroneously announced that fiercely nationalist Serb writer and ex-politician Dobrica Cosic had won the prize. Fooled by a fake website, it later apologised for the mistake.
Transtroemer, the seventh Swede to win the prestigious prize, will receive the 10 million Swedish kronor ($1.48 million, 1.08 million euros) award at a gala ceremony in Stockholm on December 10.