"It is my fervent hope that this award will spur on efforts to make the Chemical Weapons Convention a truly universal norm," the Organisation for the Prohibition of Chemical Weapons (OPCW)'s director general, Ahmet Uzumcu, said.
He said no weapon "has a monopoly on cruelty or lethality -- but chemical weapons have, by any measure, an especially nefarious legacy."
A handful of countries, including Israel, Egypt and North Korea, are not implementing a global ban watched over by the OPCW.
The Hague-based watchdog was thrust from obscurity into the spotlight this year because of its lead role in organising the destruction of Syria's chemical weapons, whose use nearly propelled the United States into a new Middle East war.
The Norwegian Nobel Committee's October 11 announcement that the OPCW won the Nobel Peace Prize for its efforts further elevated its reputation.
The body notably intends to use the eight million Swedish kronor ($1.2 million, 898,000 euros) that comes with the Nobel prize to establish its own annual award.
"With this year's prize, we prompt those states that have not acceded to the convention to do so," the chairman of the Norwegian Nobel Committee, Thorbjoern Jagland, said at the ceremony.
Norway's royal couple, King Harald V and Queen Sonja, were among the guests in Oslo's City Hall, which was decked out with red orchids and berries.
Members of the Norwegian government were also present, with the notable exception of Prime Minister Erna Solberg, who was attending the memorial ceremony for Nelson Mandela in South Africa, also held on Tuesday.
Peace Prize previously awarded to Mandela. The honour bestowed on the OPCW brings it into an elite group of people and organisations seen as having promoted peace in the world -- including Mandela.
Since the global ban on producing and storing chemical weapons came into force in 1997, 190 nations have signed up to the Chemical Weapons Convention administered by the OPCW.
More than 80 percent of declared chemical weapons have been destroyed. But, as the OPCW itself underlines, the job is not yet complete. Six states remain outside the convention: Israel and Myanmar have signed the pact but not ratified it, while Angola, Egypt, North Korea and South Sudan have failed to do either.
Among convention members, the United States and Russia have both pledged to scrap their chemical weapons, but failed to meet a 2012 deadline to do so.
The OPCW's reception of its Nobel Peace Prize comes at a time when it faces its most logistically challenging task ever: destroying chemical weapons from Syria, which became a member in October.
Syria's hasty adherence to the convention averted strikes by US-led forces after a nerve gas attack that killed hundreds on the outskirts of Damascus on August 21.
A roadmap adopted last month by the OPCW to rid Syria of its chemical stockpile says "priority" weapons must be removed from the country by December 31.
Before receiving the award on Tuesday, Uzumcu told AFP that destruction of the weapons could begin in early 2014.
"We hope that by the end of January, the destruction on the American ship could start," he said.
The Syrian weapons are to be destroyed aboard the US Navy's MV Cape Ray, a 200-metre (650-foot) cargo ship equipped with two hydrolysis systems.
Hydrolysis involves breaking down a lethal chemical agent such as mustard gas with hot water and other compounds, which results in a sludge equivalent to industrial toxic waste.
But Syria's chemical arms must first be transported through a war zone to the Mediterranean port of Latakia.
"There could be some slight delays but I'm not that worried about delays," Uzumcu added.