As has been the tradition with Nobel Peace Prize, a controversy is expected to follow the announcement of the 2010 winner as well, especially since Xiaobo was chosen despite Beijing protesting against it.
In Dec 2009, the 54-year-old dissident was jailed for a term of 11 years for drafting Charter 08, which called for multiparty democracy in the communist nation and upheld human rights.
The Chinese foreign ministry had already warned the Nobel committee not to award the Nobel Peace Prize to Xiaobo citing that such a move would be against Nobel principles.
Indicating that the winner would be a controversial just hours ahead of the announcement, Norwegian Nobel Committee president Thorbjoern Jagland had told the media that he knew he would have to defend the choice.
"You'll understand when you hear the name," he told a local television channel.
Explaining the decision-making process, he said, "We have to try to capture what is happening in the world, identify what we want to encourage and I think we are able to achieve that (with this year's prize)."
In 2009, the Nobel Peace Prize was awarded to US President Barack Obama, a decision which also sparked off a controversy and raised several questions.