Announcing the prize in Oslo, the Norwegian Nobel Committee said Ahmed's "efforts deserve recognition and need encouragement".
One of Ethiopian Prime Minister Abiy Ahmed's biggest victories was the peace deal he brokered with neighbor Eritrea.
More recently, he has turned to fleshing out his vision for the economy while laying the groundwork for elections now scheduled to take place next May. Lately, old ethnic rivalries have flared up.
Some nations are pleased by Abiy's personal touch.
In his state visit to Israel in September, Abiy was warmly welcomed by Prime Minister Netanyahu and by President Rivlin-both of whom I had accompanied on state visits to Ethiopia, billed as reciprocal visits for when the Queen of Sheba was welcomed by King Solomon to the Temple in Jerusalem 3,000 years ago.
At 43, Abiy Ahmed is the youngest head of government in Africa.
Born in 1976 in the Jimma region of western Ethiopia, Abiy is a son of a Muslim father and Christian mother. "Ethnic strife continues to escalate, and we have seen troubling examples of this in recent weeks and months".
Border crossings such as Zalambessa, which are much more important when it comes to public transportation and movement of goods and which were opened with a lot of fanfare, have all been closed again in the meantime - at Eritrea's instigation, Ethiopia was quick to point out.
Fascinated with technology, he joined the military as a radio operator while still a teenager.
News of the award trickled slowly down to the streets of the Ethiopian capital, Addis Ababa. A peaceful, stable and successful Ethiopia will have many positive side-effects, and will help to strengthen fraternity among nations and peoples in the region.
States of emergency and mass arrests ─ typical EPRDF tactics ─ worked to quell the protests but failed to address the underlying grievances. "Prime Minister Abiy played a key role in the process that led to the agreement", Reiss-Andersen added.
Eritrea gained independence from Ethiopia in 1993, after a 30-year fight.
"My feeling is that he's prepared for this moment all his life".
Abiy Ahmed took office in April 2018, becoming PM of Africa's second-most populous nation, which also holds tremendous geostrategic importance.
Abiy has engaged in other peace and reconciliation processes in East and Northeast Africa.
"The Horn is volatile".
The former Labour peer said global recognition means the work that has been put in for the last four decades is "beginning to bear fruit".
At home, Abiy offered one political surprise after another.
The peace deal was signed by the two countries in July last year, ending a 20-year-long military stalemate that followed the 1998-2000 border war.
During the summer, Mr Ahmed faced another growing threat to his power when gunmen assassinated high-ranking officials including an army chief. No awards were made on 19 occasions, including during the two world wars.
For now, as he noted in the Sheger FM interview, he remains in control.
I was in Addis Ababa previous year when Abiy announced that thousands of political prisoners would be freed and my local hosts were stunned at such a bold move. "Death shied away from me".