The prominent democracy advocate died aged 61 while still in custody following a battle with cancer.
Officials ignored international pleas to let Liu spend his final days free and abroad. Germany and the United States had offered to take him in for treatment.
"We find it deeply disturbing that Liu Xiaobo was not transferred to a facility where he could receive adequate medical treatment before he became terminally ill," Berit Reiss-Andersen, who chairs the Norwegian Nobel Committee, said in a statement.
"The Chinese government bears a heavy responsibility for his premature death."
Reiss-Andersen complained that the dissident had not been able to benefit from treatment abroad.
"While the whole world watched, China chose instead to maintain the isolation of its prisoner," she added.
Liu was transferred from prison to a heavily guarded hospital to be treated for late-stage liver cancer more than a month ago.
He became the first Nobel Peace laureate to die in custody since German pacifist Carl von Ossietzky, who passed away in a hospital while held by the Nazis in 1938.
Liu was not able to attend the Nobel award ceremony in Oslo in 2010 as he was already serving an 11-year prison sentence for allegedly "attempting to undermine political order".
The former head of the Nobel committee placed that year's peace prize on an empty chair to honour Liu.
"We now have to come to terms with the fact that his chair will forever remain empty," Reiss-Andersen added.
"At the same time it is our deep conviction that Liu Xiaobo will remain a powerful symbol for all who fight for freedom, democracy and a better world."
Reiss-Andersen criticised the international community for meeting the announcement of Liu's serious condition "with silence and belated, hesitant reactions" although she added that France, Germany, the US and the EU "eventually" called for his unconditional release.
"It is a sad and disturbing fact that the representatives of the free world, who themselves hold democracy and human rights in high regard, are less willing to stand up for those rights for the benefit of others," Reiss-Andersen said.
Norway, among other nations, has been silent in recent days over Liu's condition.
Even though the Norwegian Nobel Committee is independent of the government, Beijing froze diplomatic ties with Oslo as a result of Liu winning the peace prize.
Beijing and Oslo relations were normalised last December.