The pair was honoured "for their discovery of cancer therapy by inhibition of negative immune regulation," the Nobel Assembly said.
Immune checkpoint inhibitor therapy targets proteins made by some immune system cells, as well as some cancer cells.
The proteins can stop the body´s natural defence from killing cancer cells. The therapy is designed to remove this protein "brake" and allow the immune system to start targeting cancer cells much quicker.
The duo will share the Nobel Prize sum of nine million Swedish Kronor (about $1.01 million or 870,000 euros).
They will receive their prize from King Carl XVI Gustaf at a formal ceremony in Stockholm on December 10th, the anniversary of the death of Alfred Nobel, in 1896, who created the prizes in his last will and testament.
Last year, US geneticists Jeffrey Hall, Michael Rosbash and Michael Young were awarded the Medicine Prize for their research on the role of genes in setting the "circadian clock", which regulates sleep and eating patterns, hormones and body temperature.
The winners of this year´s Physics Prize will be announced on Tuesday, followed by the Chemistry Prize on Wednesday. The Peace Prize will be announced on Friday, and the Economics Prize will wrap up the Nobel season on Monday, October 8.