The announcement was made at the Swedish Royal Academy of Sciences at Stockholm University.
The Royal Academy explained in a statement that the laureates "have made it possible to map the mysterious ways of chemistry by using computers", adding that detailed knowledge of chemical processes allows the possibility of optimizing catalysts, drugs and solar cells.
Professor Warshel said he was "extremely well" when reached by phone in Los Angeles, despite the early hours on the US west coast.
"What we have done is to develop a method ... how proteins actually work," he explained. "It's like seeing a watch and wondering how actually it works. In short, what we developed is a way that requires a computer to take the structure of a protein and then to eventually understand how it does what it does."
"If you want to understand how it is happening then you can use it for example to design drugs or in my case to satisfy your curiosity."
The focus on enzymes mean there are drugs on the market today, including HIV medication, that have been developed with the help of the trio's model, said Johan Åqvist, professor of theoretical chemistry and a Royal Academy board member who has worked with Warshel in Los Angeles.
"Molecular size doesn't matter," Åqvist explained about the model that has made it possible to test theories on complex chemical reactions. Asked to summarize in a few words what the laureates had won the prize for, he said, "computers take over chemistry".
"The computational methods allow you to study biochemical processes in details. One problem before was that there wasn't enough computational power to treat complex systems with thousands, or nowadays millions, of atoms," Åqvist told The Local.
Warshel, when he moved from Israel, brought with him knowledge from the computer Golem - one of the early computers that were critical to the field, Åqvist said.
"When chemical reactions happen you break and make new bonds. It can only be treated with quantum mechanics, but if these reactions take place inside a big enzyme, there are thousands of atoms surrounding this little region where things really happens," Åqvist continued.
"The nice idea they had was to treat the surrounding part with classical physics, but this very interesting area with quantum physics," he added. "They are focusing in."
This in essence means researchers can now look at very complex reactions that were previously out of reach - "molecular size doesn't matter," Åqvist said.
Gunnar Karlström at the Swedish Royal Academy told reporters that the laureates "sent away a three-step rocket" - first step when Karplus and Warshel in 1973 devised a method to merge the "quantum and classical worlds" in chemistry. Subsequent research added two more steps to the work that was recognized on Wednesday.
To break it down to its simplest form, the Nobel Prize was awarded for the three chemists' work in using computers to make visible and to understand exactly what's going on during chemical reactions.
Chemical reactions occur at lightning speed, the committee reasoned, with electrons jumping between atomic nucleii so microscopically, that the prying eyes of scientists simply cannot watch.
It was the methods of Karplus, Levitt, and Warshel - first realized back in the seventies - that allowed modern scientists to devise and carry out such experiments on their computers
The three laureates will share a prize sum of 8 million kronor ($1.24 million)
Martin Karplus was born in 1930 in Vienna, Austria, and is a US citizen. He studied at the California Institute of Technology and is Professeur Conventionné at the Université de Strasbourg in France, as well as at Harvard in the United States.
Michael Levitt is a US and British citizen, born 1947 in Pretoria, South Africa. He studied at Cambridge University in the UK.
Arieh Warshel is a dual US-Israeli citizen born in 1940 in Kibbutz Sde-Nahum, Israel. He studied at the Weizmann Institute of Science, Rehovot, Israel, and is the distinguished Professor at the University of Southern California in Los Angeles.
Wednesday's news follows Tuesday's Physics announcement where Peter Higgs and Francois Englert took home the Nobel Prize, and Monday's Medicine Prize which went to two Americans and one German for their research into cell transportation systems.
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