The Swedish Academy's pick for the 2019 prize, announced in October, triggered outrage in the Balkans and beyond because of Handke's support for late Serbian strongman Slobodan Milosevic.
The 77-year-old Austrian author received his award from Sweden's King Carl XVI Gustaf at a ceremony with this year's other laureates, followed by a gala banquet for more than 1,300 guests.
The Academy honoured Handke “for an influential work that with linguistic ingenuity has explored the periphery and the specificity of human experience”.
It called him “one of the most influential writers in Europe after the Second World War”.
But the decision has stirred controversy.
One Nobel committee member resigned over the choice, while Tuesday's ceremony was boycotted by one Academy member and representatives of the embassies of Albania, Bosnia, Croatia, Kosovo, North Macedonia and Turkey.
Hundreds of protesters gathered in the city to oppose the award, including a handful of people outside the Stockholm Concert Hall holding banners urging him to “apologize to the victims of Srebrenica”.
Some 8,000 Bosnian Muslim men and boys were killed by Bosnian Serb forces in July 1995, which the International Criminal Tribunal for the former Yugoslavia has recognized as a genocide.
In 1997 Handke was accused of minimizing Serb war crimes in his book A Journey to the Rivers: Justice for Serbia.
He also drew criticism for speaking at the 2006 funeral of Milosevic, who died while on trial for genocide, war crimes and crimes against humanity.
Turkish President Recep Tayyip Erdogan on Tuesday slammed the choice of Handke, saying “the Nobel has completely lost its prestige”.
“Awarding a person who defends a murderer responsible for the bloodshed of tens of thousands of Muslims is a disgrace,” he said on Turkish television.
Kosovo Foreign Minister Behgjet Pacolli wrote on Twitter it was “a shameful day for Europe”.
Handke's award came as the Academy struggles to recover from a rape scandal that resulted in the 2018 literature prize being postponed and awarded this year to Polish author Olga Tokarczuk.
A protest at the Norra Bantorget square in Stockholm. Photo: Stina Stjernkvist/TT
Between 500 and 1,000 people attended an anti-Handke protest at the Norrmalmstorg square in central Stockholm.
Some waved Bosnian flags and wore white armbands, a nod to Bosnian Serb authorities who in May 1992 ordered non-Serbs to wear white armbands.
Handke “has expressed solidarity and sympathy for people who have carried out so many evil things during the war in Bosnia”, said Ernada Osmic, a Bosnian refugee who came to Sweden in 1995 and who attended the protest with her 27-year-old daughter Lejla.
Awarding him the prize was “the wrong decision”, she said.
At a Stockholm press conference, Handke dodged questions on the Balkan wars, telling reporters: “I like literature, not opinions.”
But in an interview with German weekly Die Zeit in November, he defended his writings.
“Not one word I have written about Yugoslavia can be denounced, not a single one. It's literature,” he said.
Back then, “reporting about Serbia was monotone and one-sided”, Handke told Die Zeit.
He said he “of course” had to be at Milosevic's funeral.
“He voted against dissolving Yugoslavia in one of the last ballots. His funeral was Yugoslavia's funeral too,” Handke said. “Have people forgotten that this state was founded in opposition to Hitler's Reich?”
A protest at the Hötorget square in Stockholm. Photo: Karin Wesslén/TT
The head of the Swedish Academy's Nobel committee, Anders Olsson, has insisted Handke is “not a political writer”.
But another committee member, Peter Englund, disagreed.
“I will not participate in Nobel Week this year… Celebrating Peter Handkes Nobel Prize would be pure hypocrisy on my part,” Englund said.
But there was also praise for Handke, with Serbian President Aleksandar Vucic saying Serbia considered him “a true friend”.
“This prize is for your extraordinary literary work, for your knowledge and creativity, but also for unquestioned moral characteristic, for bravery and dignity you use to fight for your ideals as a top intellectual,” Vucic wrote in a message to Handke, his office said in a statement.
Handke had in 2014 called for the Nobel Literature Prize to be abolished, saying it conferred a “false canonization” on the laureate.
At the Nobel Banquet on Tuesday evening, the author was the laureate seated furthest from the King and Queen at the head table, while Tokarczuk was placed between the King and Prince Daniel, the husband of Crown Princess Victoria.
Organizers refused to comment on the seating arrangements.
Handke has also not been invited to a traditional event for literature laureates with high school students in a Stockholm suburb on Wednesday. Tokarczuk will however attend.
Article by AFP's Pia Ohlin