The Swedish Academy in Stockholm announced that Mr Gao was their choice for the year 2000.
The Academy said Mr Gao had produced "an oeuvre of universal validity, bitter insights and linguistic ingenuity, which has opened new paths for the Chinese novel and drama".
A French citizen, he is the first Chinese writer to win the literature prize, which is awarded to the person who produces, in the view of the Academy "the most outstanding work of an idealistic tendency".
Political refugee
Mr Gao, 60, is a political refugee and playwright whose works have not been performed in China since his work The Other Shore was banned in 1986.
The newly annointed Nobel laureate admitted to being surprised by the announcement.
Gao Xingjian told the French news agency AFP that he did not consider himself among the favourites. "Perhaps it was better that way," he joked.
Mr Gao left China in 1987 and now lives in Paris, the citation said.
Nationality is not supposed to be a consideration in awarding the Nobel prize, but most observers believe that the academy tries to spread the honour among countries.
Million dollar prize
Mr Gao's prize is nine million kronor, or just under $1m.
He will receive the prize, along with the other Nobel laureates, from the hands of Sweden's King Carl XVI Gustaf at the official ceremony in Stockholm on 10 December.
The Nobel prize is named after its creator, the Swedish scholar and inventor Alfred Nobel who died in 1896.
Thursday's Literature Prize was the fifth of the six Nobel prizes to be awarded by the Royal Swedish Academy of Sciences this year.
The final and most prestigious prize, that for peace, will be announced on Friday.