Abiy Ahmed was awarded the prize for efforts to achieve peace and international cooperation, and in particular his decisive initiative to resolve the border conflict with neighbouring Eritrea.
It's unclear how relations between Addis Ababa and Asmara will develop but the warmth has largely gone.
The lifting of UN Sanctions is unlikely to end internal and external pressure for reform and greater democracy in Eritrea.
It would be a mistake to ridicule what's been achieved in the Horn of Africa, but obstacles remain.
The Eritrean ports of Massawa and Assab will hum with life once more as trade flows through them.
Relations between Ethiopia and Eritrea have improved thanks to efforts made by Ethiopia's new premier.
Few believed they would see an end to two decades of hostility between Eritrea and Ethiopia.
The growing Arab military, political and religious influence is only the latest example of an external force taking hold in the Horn of Africa.