It is the first time an orchestra has been chosen since the prize was launched in 2009. Then, the choice fell on opera star Placido Domingo, who was personally chosen by Nilsson and honored three years after her death. Conductor Riccardo Muti was picked three years later.
Orchestra President Clemens Hellsberg told The Associated Press that he was honored by the choice, describing the famed Swedish diva as having a huge "impact on my life" as a violinist.
Birgit Nilsson Foundation president Rutbert Reisch said the choice of the orchestra fit the award's criteria for artists "who have made the biggest contribution to classical music."
The Birgit Nilsson prize adds to the list of honors accorded to the Viennese ensemble, which is recognized as one of the world's greatest.
A multiple Grammy winner and nominee, it was chosen as Europe's finest orchestra by a panel of experts in 2006. Gramophone Magazine listed it third in the world in 2008. Trade publications have ranked their recordings within the top 10 new classical album releases at least twice since 2003.
Asked whether the award finally decided the informal competition with the Berlin Philharmonic as the better orchestra, Hellsberg demurred.
"I don't think we should deal in music in terms of sports," he said, adding that the sole mission of any orchestra "is to reach the hearts of the audience."
While declining to say when he was informed of the pick, Hellsberg described it as "a big surprise," because initial discussion on who should be chosen focused on individuals.
Hellsberg, who is on the five-member jury that decides on winners, withdrew from the judging once it became clear that an orchestra would be chosen this year.
He said the full orchestra would travel to Stockholm for the Oct. 8 award ceremony, in the presence of King Swedish King Carl XVI Gustav for a performance of works by Franz Liszt and Richard Wagner, conducted by Muti.
"It is our desire to express our gratitude, and not only in words," he said of that decision.
As for the prize money, Hellsberg said the orchestra would decide on what to do with it at its next assembly.
"We are a democratic institution," he said.