Ed Sheeran has picked up his first nomination for the Mercury Prize, recognising the overwhelming success of his third album ÷ (Divide).
But he faces strong competition from grime artists Stormzy and J Hus and rapper Loyle Carner, who each receive nominations for their debut albums.
Their nominations come a year after Skepta took home the £25,000 prize, beating bookies' favourite David Bowie.
Former winners The xx and Alt-J also make the 12-strong shortlist.
Bookmakers have already made Sampha and Stormzy the favourites this year - putting Sheeran in the unusual position of being the underdog.
Writing on Twitter, Stormzy - currently touring in Australia - said he was "over the moon right now".
"I put my heart, my soul and my absolute everything into making this album," he said of Gang Signs and Prayer. "Giving God the glory."
The nomination of three British rap albums "can only be seen as a positive thing," said Loyle Carner, who is shortlisted for his deeply personal, melancholy debut Yesterday's Gone.
"If people are writing rhymes and people across the world are listening to it, then that's a good thing."
J Hus, nominated for his amiable, genre-spanning Common Sense album, said he was confident grime could score two consecutive triumphs at the Mercury Prize.
"If I don't win it, hopefully Stormzy will win it," he told the BBC. "We're really good friends, so it's a win-win either way."
The full list of nominees is:
- Alt-J - Relaxer
- Blossoms - Blossoms
- Dinosaur - Together, As One
- Ed Sheeran - ÷ (Divide)
- Glass Animals - How To Be A Human Being
- J Hus - Common Sense
- Kate Tempest - Let Them Eat Chaos
- Loyle Carner - Yesterday's Gone
- Sampha - Process
- Stormzy - Gang Signs and Prayer
- The Big Moon - Love in the 4th Dimension
- The xx - I See You
The shortlist was chosen by a panel of judges that includes Marcus Mumford, Jessie Ware, Ella Eyre, Radio 1's Clara Amfo and jazz musician Jamie Cullum.
"We were only allowed to talk about positive things," said Mumford of the deliberations, "so I shut up quite a lot".
"I actually found that difficult because I'm quite cynical," added Ella Eyre, "But I think it's a good way to do it - focusing on the positives of an album. Initially."
Among the jury's selections are two albums that tell short stories about fictional characters.
On Let Them Eat Chaos, poet Kate Tempest portrays the lives of seven sleepless citizens on one South London street.
In How To Be A Human Being, meanwhile, Oxford band Glass Animals turn their eye to America with lyrics loosely inspired by people they met on tour.
Many of the other nominees have written about family, with Stormzy and J Hus both dedicating songs to their mothers.
Sheeran, meanwhile, closes his album with the touching ballad Supermarket Flowers, which reflects on the death of his grandmother and its effect on his parents.
Notable omissions from this year's shortlist include Rag 'N' Bone Man's Human, Wiley's Godfather and Marika Hackman's I'm Not Your Man.
Three-time nominee Laura Marling was also overlooked, despite rave reviews for her latest album Semper Femina.
The winner will be announced at a gala concert at London's Eventim Apollo on 14 September.
A controversial rule, which saw six of the nominated albums "eliminated" at the start of last year's ceremony, has been ditched for 2017.
Analysis by Mark Savage, BBC Music reporter
Ed Sheeran's name really sticks out on this year's Mercury shortlist. Amongst the jazz trumpeting of Dinosaur and performance poetry of Kate Tempest, he's a major household name who has sold more than 2 million copies of his record in just four months.
Normally, the Mercury turns its nose up at this sort of commercialism. Adele's 25 didn't get nominated, Coldplay's A Head Full of Dreams didn't get nominated... and, as many have pointed out, none of Ed's previous albums got nominated.
So what's going on? The obvious answer is the panel were impressed by his writing. No one else has done more to dictate the sound of the Top 40 this year. Alongside his own hits, he's written Rita Ora's Your Song and Liam Payne's Strip That Down and spawned several imitators - from Shawn Mendes to Passenger.
You could argue that his presence on the shortlist is robbing an under-exposed artist of the spotlight. But putting Sheeran alongside J Hus or The Big Moon could just as easily introduce those acts to a whole new audience.
What seems certain is he won't win. Not since M People's victory in 1994 has a pop act been rewarded with the Mercury - and even David Bowie got shunted aside in favour of Skepta last year.