Announcing the prize at the Karolinska Institute in Stockholm on Monday, the Nobel committee said that the trio's discoveries have paved the way for "promising new strategies to fight anaemia, cancer and many other diseases."
The 2019 medicine laureates, the committee added, have identified molecular machinery that regulates the activity of genes in response to varying levels of oxygen.
The importance of oxygen has long been established, the committee explained, but how cells adapt to changes in its levels remained unknown.
Randall Johnson, prize committee member, described the trio's work as a "textbook discovery."
"This is something basic biology students will be learning about when they study, at aged 12 or 13, or younger, biology and learn the fundamental ways cells work. This is a basic aspect of how a cell works and, from that standpoint alone, it's a very exciting thing."
New York-born Kaelin established his own research laboratory at the Dana-Farber Cancer Institute in Boston and became a full professor at Harvard Medical School in 2002.
Semenza, also born in New York, became a full-time professor at Johns Hopkins University in 1999 and since 2003 has been the Director of the Vascular Research Program at the Johns Hopkins Institute for Cell Engineering.
Ratcliffe, who was born in Lancashire, England, studied medicine at Cambridge University and established an independent research group at Oxford University, becoming a full professor in 1996.
The Englishman discovered a universal mechanism for detecting and responding to low oxygen levels, known as hypoxia, that has since been found in all cells.
Speaking to Nobelprize.org, Ratcliffe revealed that he was in the process of writing a grant proposal when he received the call informing him that he had won the prestigious prize.
"As with almost any discovery science the impact of that becomes evident later. We didn't foresee the broad reach of this system when we started the work," he said, adding that the award was "very satisfying."
"I'm not ecstatic about the possibility of being a public figure, if that's what one is ... I'll do my duty, I very much hope."
The three laureates will share the 9m Swedish kronor ($907,000) equally.