Thelma Aldana of Guatemala and Ivan Velasquez of Colombia were honoured for their "innovative work in exposing abuse of power and prosecuting corruption, thus rebuilding people's trust in public institutions," the jury said in a statement.
Aldana, 62, is a former president of Guatemala's Supreme Court and served as attorney general until May, when she stepped down.
Velasquez, 63, is currently the head of the UN's International Commission against Impunity in Guatemala (CICIG).
"This prize comes at a particularly dramatic moment in the fight against impunity and corruption. It is very important because it will turn the eyes of the world to Guatemala, and hopefully also provide international solidarity with those who are committed to the transformation of the country," Velasquez
said in the statement.
On September 20th, thousands of students and activists demonstrated in Guatemala's capital calling for the resignation of President Jimmy Morales, whom the CICIG alleges failed to report nearly one million dollars in financing to electoral authorities during his 2015 presidential campaign.
The UN mission has asked for Morales' presidential impunity to be lifted so it can investigate the matter.
In late August, Morales said he would not ask the United Nations to renew the CICIG's mandate beyond September 2019. Four days later, Morales banned Velasquez from entering the country.
The two laureates have collaborated together and been responsible for several high-profile and sensitive criminal investigations, most notably the "La Linea" corruption case which led to 60 prosecutions, including the arrest of then-president Otto Perez Molina, who was forced out in 2015 after three years in power.
Alternative Nobel prize
The Swedish jury also awarded three other cash awards of one million kronor ($114,000) each.
The first went to jailed Saudi human rights defenders Abdullah al-Hamid, Mohammad Fahad al-Qahtani and Waleed Abu al-Khair, while the second went to farmer Yacouba Sawadogo of Burkina Faso for "turning barren land into forest" and making it possible for farmers to regenerate their soil. The third prize went to Australian agronomist Tony Rinaudo for "demonstrating on a large scale how drylands can be greened at minimal cost".
Swedish-German philatelist Jakob von Uexkull founded the donor-funded prize in 1980 after the Nobel Foundation behind the Nobel Prizes refused to create awards honouring efforts in the fields of the environment and international development.
They were introduced "to honour and support those offering practical and exemplary answers to the most urgent challenges facing us today," according to the Right Livelihood Award Foundation, which often calls its distinction the "alternative Nobel prize".