Iran has also been invited to the December event in the Swedish capital of Stockholm, after being left out last year.
The foundation said it wanted to involve even those who do not share the values of the Nobel Prize.
“It is clear that the world is increasingly divided into spheres, where dialogue between those with differing views is being reduced,” said Vidar Helgesen, executive director of the Nobel Foundation, in a statement Thursday.
“To counter this tendency, we are now broadening our invitations to celebrate and understand the Nobel Prize and the importance of free science, free culture and free, peaceful societies,” Helgesen said.
Russians and Belarusians have been excluded from countless events since Moscow launched its full-scale invasion of Ukraine, which has been heavily assisted by Minsk, in February 2022.
Athletes from Russia and Belarus have been banned from competing in numerous sporting events, and diplomats are regularly excluded from summits.
But the foundation said its decision was made to prevent further “polarisation.”
“The achievements recognised by the Nobel Prize require openness, exchange and dialogue between people and nations. The Nobel Foundation would like to reach out with this message to everyone,” it said in a statement.
Swedish Prime Minister Ulf Kristersson said he had not expected the foundation to invite Russia to this year’s event.
“The Nobel Foundation naturally decides themselves who they want to invite. But I, like many others, reacted with great surprise that Russia was invited,” Kristersson said in a statement sent to CNN on Friday.
“I would not have done it if I was issuing invites to an award ceremony and I understand that it upsets many people in both Sweden and Ukraine,” he added.
A Swedish member of the European Parliament called the decision “extremely inappropriate.”
“The Nobel Committee contributes to set a precedent, a very dangerous precedent, giving a green light to invite Russia to a glamorous party while the missiles fall over Ukrainian cultural centers and murder children,” Swedish Liberal MEP Karin Karlsbro told Swedish national radio.
Karlsbro questioned why the foundation invited “three rogue states… that suppress their citizens, wage war and terror both in their own and neighboring countries,” and “in no way subscribe to democratic values.”
“It’s an incredibly naive view, and it undermines the cohesion we need throughout society globally, in Europe, to support Ukraine to win this war and stop Putin,” she said.
The Nobel Foundation also reversed its longstanding policy of excluding the leader of the Sweden Democrats, a far-right party which forms a part of the country’s coalition government.
However, despite being invited for the first time, Sweden Democrats leader Jimmie Akesson snubbed the invitation.
“Sorry, I’m busy that day,” he wrote on Facebook.
The Nobel Banquet takes place annually in Stockholm on December 10, where five out of six Nobel Prizes are awarded. The Nobel Peace Prize is awarded in Oslo, Norway.
CNN’s Henrik Pettersson and Niamh Kennedy contributed reporting.