The €35,000 (£23,000) prize, which is awarded to new collections published in English during the last 12 months, is the world's richest short story prize. The prize will be shared between Murakami and his translators, Philip Gabriel and Jay Rubin.
Rubin paid tribute to the famous short story writer as he accepted the prize.
"If you have read Frank O'Connor's Guests of the Nation you'll be familiar with his theme that people need to recognise each other's common humanity," he said. "Haruki's stories are similarly powerful. As a translator, I am overwhelmed and honoured and I am sure Haruki will be too."
Blind Willow, Sleeping Woman topped a shortlist which spanned three continents. First collections from Irish writer Philip Ó Ceallaigh and American author Rachel Sherman were nominated alongside entries from English writer Rose Tremain, Nepal-born Samrat Upadhyay and Peter Stamm, a Swiss author who writes in German.
The award, created in memory of the Frank O'Connor, is the highlight of the annual Frank O'Connor Short Story Festival, which ran from Wednesday to Sunday last.