The Karolinska Institute cited their discovery of RNA interference in awarding them the 10-million-kronor ($1.37-million) prize.
The award winners have discovered "a fundamental mechanism for controlling the flow of genetic information", the institute said.
RNA interference features in plants, animals and humans and is of great importance for regulating gene expression. It also participates in defence against viral infections and keeps so-called "jumping genes" under control, it noted.
RNA interference is also used in basic science to study how genes function and may perhaps in future offer therapies for cardiovascular diseases and cancer, according to the institute.
The American scientists first published their findings in the scientific journal Nature in 1998, opening a new research field.
Professor Bertil Daneholt of the Karolinska Institute's Department of Cell and Molecular Biology told the Swedish radio that the discovery centred on a completely new mechanism to regulate gene activity.
"I was very happy," Fire told the Swedish radio, minutes after being notified by the Karolinska Institute. "At first one doesn't believe it, could be dreaming or a mistake, but guess it is not. Wonderful point to be in."
Fire added that he aims to continue with his research and teaching.
Fellow-laureate Mellow told Swedish radio that "it is still sinking in, I can hardly believe it" after being notified.
Both award winners, who equally share the prize money, said they hope to attend the awards ceremony in Stockholm on December 10, the anniversary of Alfred Nobel's death.
Mellow, reached at his home in Boston, said he was "very surprised because I am fairly young and thought there were so many other discoverers worthy of a Nobel Prize".
Fire, born in 1959, earned his PhD at the Massachusetts Institute of Technology and is now professor of pathology and genetics at Stanford University School of Medicine in California.
Mello, born in 1960, earned his doctorate at Harvard University, and is professor of molecular medicine at the University of Massachusetts Medical School.
The Nobel prize for medicine or physiology was the first of this year's awards to be announced. Prizes are also awarded for physics, chemistry, literature, economics and peace.
The physics prize was slated to be announced Tuesday.