Arcade Fire, Feist in Shortlist final ten
The accolade, which has been dubbed the American Mercury Music Prize, awards artists that have sold under 500,000 albums in the US.
Previous winners include Sigur Ros, Damien Rice and Cat Power.
Artists including Snow Patrol's Gary Lightbody and The Killers' Ronnie Vannucci are on the judging panel for the award.
The final 2008 list is:
Arcade Fire - Neon Bible
Burial - Untrue
Feist - The Reminder
Justice - Cross
LCD Soundsystem - Sound of Silver
M.I.A. - Kala
Spoon - Ga Ga Ga Ga Ga
Stars - In Our Bedroom After the War
Wilco - Sky Blue Sky
Working for a Nuclear Free City - Businessmen & Ghosts