Sara Danius, permanent secretary of the Swedish Academy, said Ishiguro is a writer "who, in novels of great emotional force, has uncovered the abyss beneath our illusory sense of connection with the world."
Ishiguro, whose family moved to Britain from Japan when he was 5 years old, has written eight books, the most recent of which, "The Buried Giant," was published in 2015.
His third novel, "The Remains of the Day," published in 1989, won Ishiguro a Booker prize and world renown. In 1993, it was turned into an Academy Award-nominated film starring Anthony Hopkins as the duty-obsessed butler, Stevens.
"Never Let Me Go" is a dystopian work which introduces an undercurrent of science fiction into his oeuvre with an exploration of issues around human clones.
"I don't think it will sink in for a long time," Ishiguro said of the honor in a phone interview with the Swedish Academy that was uploaded to YouTube. "I mean, it's a ridiculously prestigious honor, in as far as these kinds of things go."
The author said: "One of the things that interested me always is how we live in small worlds and big worlds at the same time. That we have a personal arena in which we have to try and find fulfillment and love. But that inevitably intersects with a larger world, where politics or even dystopian universes can prevail."
The 62-year-old's "writings are marked by a carefully restrained mode of expression, independent of whatever events are taking place," said the academy's news release.
"If you mix Jane Austen and Franz Kafka, then you have Kazuo Ishiguro in a nutshell," Danius told reporters of this year's winner. "But you have to add a little bit of Marcel Proust into the mix, and then you stir but not too much, and then you have his writings.
"At the same time, he's a writer of great integrity who doesn't look to the side. He's developed an aesthetic universe all his own."
According to the Nobel Twitter feed, the themes with which Ishiguro is most associated are "memory, time, and self-delusion."
"He is someone who is very interested in understanding the past but he's not a Proustian writer -- he's not out to redeem the past, he writes about what you've had to forget to survive in the first place, as an individual and as a society," said Danius.
Asked whether Ishiguro was a less controversial winner than last year's literature laureate -- US singer-songwriter Bob Dylan
-- Danius replied: "That's not for me to judge. We've just chosen what we think is an absolutely brilliant novelist."
Dylan did not show up to accept his prize
at the awards ceremony in Stockholm, Sweden, where singer Patti Smith performed a Dylan classic in his stead. He received the honor later.
Ishiguro is himself a fan of Dylan's work. In a 2005 interview with Britain's Guardian newspaper
, Ishiguro said that while at school, he and his friends took songwriting "very, very seriously." He added: "My hero was and still is Bob Dylan."
Besides his novels, Ishiguro has written short stories and scripts for film and television.
Ishiguro's publisher, Faber & Faber, tweeted that it was "thrilled" that he had won.
The Twitter feed for The Orwell Prize, a British award for political writing, also congratulated Ishiguro on his award, saying: "I'm sure it's not one of the criteria, but 'The Remains of the Day' made me cry."
The Swedish Academy received and approved 240 proposals for this year's literature prize, resulting in 195 candidates, it said.