The family greeted the parade waving from the balcony of the Grand Hotel in central Oslo, as a picture of Mohammadi, 51, was projected onto the facade of the building where Nobel Day ends with a banquet.
Earlier in the day, Mohammadi's 17-year-old twins Kiana and Ali Rahmani collected the prize, a gold medal and diploma, at a ceremony in Oslo's City Hall attended by several hundred guests.
Mohammadi won the peace prize on October 6 in a rebuke to Tehran's theocratic leaders and boost for anti-government protesters, while also drawing the Islamic Republic's swift condemnation.
The award-making committee said the prize honoured those behind recent unprecedented demonstrations in Iran and called for the release of Mohammadi, who has campaigned for three decades for women's rights and abolition of the death penalty.