Satyarthi and Yousafzai were picked for their struggle against the suppression of children and young people, and for the right of all children to education, the Norwegian Nobel Committee said.
"The Nobel Committee regards it as an important point for a Hindu and a Muslim, an Indian and a Pakistani, to join in a common struggle for education and against extremism," said Thorbjoern Jagland, the head of the Norwegian Nobel Committee.
"It has been calculated that there are 168 million child labourers around the world today," Jagland said. "In 2000 the figure was 78 million higher. The world has come closer to the goal of eliminating child labour."
Satyarthi has headed various forms of peaceful protests and demonstrations, focusing on the exploitation of children for financial gain.
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Yousafzai was attacked in 2012 on a school bus in the Swat Valley in northwest Pakistan by masked gunmen as a punishment for a blog that she started writing for the BBC's Urdu service as an 11-year-old to campaign against the Taliban's efforts to deny women an education.
Unable to return to Pakistan after her recovery, Yousafzai moved to Britain, setting up the Malala Fund and supporting local education advocacy groups with a focus on Pakistan, Nigeria, Jordan, Syria and Kenya.
The prize, worth about $1.1 million, will be presented in Oslo on Dec. 10, the anniversary of the death of Swedish industrialist Alfred Nobel, who founded the award in his 1895 will.