Sexual Minorities Uganda (SMUG), headed by Frank Mugisha, won the award for "its work to make fundamental human rights apply to everyone, and to eliminate discrimination based on sexual orientation or gender identity," the Rafto Foundation said in its citation.
Uganda, where homosexuality is punishable with life imprisonment, saw the introduction of a bill in October 2009 that would make homosexual rape of a minor or the transmission of AIDS during homosexual relations subject to the death penalty.
Parliament hotly debated the law proposal, decried by the international community, before shelving it last May, although there is still room for it to be reintroduced.
SMUG, an umbrella organisation of groups working to protect the rights of gays, lesbians, bisexuals, transsexuals and intersexuals, "has played an important role in opposing the proposed 'Anti-Homosexuality Bill'," the Rafto jury said.
The coalition "has successfully used the legal system to fight harassment and violence from government and private actors," it added.
By giving the 2011 prize to SMUG, the Rafto Foundation said it hoped "the award will help afford them greater protection and inspiration to continue working in what is a vulnerable and difficult situation."
The annual Rafto award was created in 1986 in memory of Norwegian economic history professor Thorolf Rafto, a longtime human rights activist.
The prize of a diploma and $10,000, which is often awarded to relatively unknown human rights defenders, will be presented on November 6th in the western Norwegian town of Bergen.
Four past Rafto Prize laureates (Aung San Suu Kyi, Jose Ramos-Horta, Kim Dae-Jung and Shirin Ebadi) went on to win to Nobel Peace Prize, whose laureate for 2011 will be announced on October 7th.