"You have to admit it's a fantastic set of discoveries, really exciting," said Göran Hansson, secretary of the Nobel Committee for Physiology or Medicine in the ceremony at the Karolinska Institute in Solna, in the Swedish capital.
"How do we know where we are? How can we find the way from one place to another? And how can we store the information in such a way that we can immediately find the way the next time we trace the same path?".
"This year's Nobel laureates have helped answer these questions by discovering an "inner GPS" in our brains that helps us orient ourselves, demonstrating a cellular basis for higher cognitive function," he added.
Reading to her win, May-Britt said: "I was crying – I was in shock and I'm still in shock. This is so great!".
The Local's Maddy Savage, who was at the Karolinska Institute, reported that the panel of experts had been quizzed about how the winners' work will impact scientific work in the future.
"They say that this research is likely to give important 'results and inspiration', but there is no specific way in which the findings are going to be used in medicine in the immediate future," she said.
"But according to the press release handed out to journalists here, the research has 'opened new avenues for understanding other cognitive processes, such as memory, thinking and planning'," she added.
The findings may help explain why Alzheimer's disease patients cannot recognise their surroundings.
"The discoveries have solved a problem that has occupied philosophers and scientists for centuries," the Nobel Committee said.
John O'Keefe was born in 1939 and holds dual UK and US citizenships.
He was born in New York City, studied at McGill University in Canada, and moved to London after his graduation. He was appointed Professor of Cognitive Neuroscience in 1987 at the University College London where he works today.
2014 Laureate May-Britt Moser. Photo: TT
His co-laureates are a married couple. May-Britt Moser was born in Norway, in 1963, and studied with her husband Edvard at the University of Oslo. Edvard, who was born the year before, joined his wife in an academic adventure when the pair studied at the University of Edinburgh and the University College London before heading back to Norway. They both work in Neuroscience in Trondheim in north west Norway.
The Mosers are the fifth married couple to be awarded a Nobel Prize. May-Britt marks the 11th woman in over 100 years to snag the Nobel Prize in Medicine.
The Local challenged the Chairman of the Nobel Committee for Physiology or Medicine, Professor Juleen Zierath, to explain why this year's prize is important in just 60 seconds. She managed in just 34 seconds, without any notes in front of her.
Swedish inventor and scholar Alfred Nobel, who made a vast fortune from his invention of dynamite in 1866, ordered the creation of the famous Nobel prizes in his will.
Chemistry, Physics, Literature and Economics awards are also set to be handed out this week, with the Nobel Peace Prize announced in Oslo.
The winners will receive their awards in December.