A scientist whose work was so controversial he was ridiculed and asked to leave his research group has won the Nobel Prize in Chemistry.

Daniel Shechtman, 70, a researcher at Technion-Israel Institute of Technology in Haifa, received the award for discovering seemingly impossible crystal structures in frozen gobbets of metal that resembled the beautiful patterns seen in Islamic mosaics.

Images of the metals showed their atoms were arranged in a way that broke well-establised rules of how crystals formed, a finding that fundamentally altered how chemists view solid matter.

In addition to the kudos of the award, Shechtman receives 10 million Swedish kronor (£934,000).

Crystallised materials are normally made up of "unit cells" of atoms that repeat over and over to make a single, uniform structure. This kind of crystal structure makes graphite a good lubricant, for example, because it can cleave easily across certain planes of weakness.

On the morning of 8 April 1982, Shechtman saw something quite different while gazing at electron microscope images of a rapidly cooled metal alloy. The atoms were packed in a pattern that could not be repeated. Shechtman said to himself in Hebrew, "Eyn chaya kazo," which means "There can be no such creature."

The bizarre structures are now known as "quasicrystals" and have been seen in a wide variety of materials. Their uneven structure means they do not have obvious cleavage planes, making them particularly hard.

"His discovery was extremely controversial. In the course of defending his findings, he was asked to leave his research group," the Nobel committee at the Royal Swedish Academy of Sciences said in a statement. "However, his battle eventually forced scientists to reconsider their conception of the very nature of matter … Scientists are currently experimenting with using quasicrystals in different products such as frying pans and diesel engines."

In an interview this year with the Israeli newspaper, Haaretz, Shechtman said: "People just laughed at me." He recalled how Linus Pauling, a colossus of science and a double Nobel laureate, mounted a frightening "crusade" against him. After telling Shechtman to go back and read a crystallography textbook, the head of his research group asked him to leave for "bringing disgrace" on the team. "I felt rejected," Shachtman said.

The existence of quasicrystals, though controversial, was anticipated much earlier, but Shechtman was the first to see them in nature. The 16th century astronomer Johannes Kepler drew quasicrystal-like patterns in his book Mysterium Cosmographicum.

In the 1970s, Sir Roger Penrose, the Oxford University mathematical physicist, created "aperiodic" tiling patterns that never repeated themselves, work that he suspects was inspired by Kepler's drawings.

"I once asked Shechtman if he knew about my tilings when he saw the things he saw. He said he did, but that he didn't have them in mind when he was looking at them," Penrose told the Guardian. "I think it was rather similar to my experience with Kepler's patterns. Probably he was influenced unconsciously."

Penrose's own contribution to the field led some scientists to suggest he might himself be a contender for the Nobel prize. "Some people have said that, but I was a bit doubtful that would happen. Shechtman was the first person to see these things and it took a while to come around to the view that the things that were seen were the same kind of patterns I'd produced about 10 years earlier," he said.

While the patterns were beautiful and fundamentally interesting, Penrose said he was not aware of any very successful commercial applications. Though quasicrystal frying pan coatings exist, he said: "I am not sure they are terribly effective. I believe they interact with egg."

Astrid Graslund, professor of biophysics at Stockholm University and secretary for the Nobel Committee for Chemistry, conceded: "The practical applications are, as of now, not so many. But the material has unexpected properties. It is very strong, it has hardly any friction on the surface, it doesn't want to react with anything, [it] cannot oxidize and become rusty."

David Phillips, president of the Royal Society of Chemistry, said: "Quasicrystals are a fascinating aspect of chemical and material science – crystals that break all the rules of being a crystal at all. You can normally explain in simple terms where in a crystal each atom sits – they are very symmetrical. With quasicrystals, that symmetry is broken: there are regular patterns in the structure, but never repeating."

He added: "They're quite beautiful, and have potential applications in protective alloys and coatings. The award of the Nobel Prize to Danny Shechtman is a celebration of fundamental research."