The widely used process has helped scientists use mice to study heart disease, diabetes, cancer, cystic fibrosis and other diseases.

Capecchi, 70, who was born in Italy, is at the University of Utah in Salt Lake City. Smithies, 82, born in Britain, is at the University of North Carolina in Chapel Hill. Evans, 66, works at Cardiff University in England.

They were honored for a technique called gene targeting, which lets scientists inactivate or modify particular genes in mice. That in turn lets them study how those genes affect health and disease.

To use this technique, researchers introduce a genetic change into mouse embryonic stem cells. These cells are then injected into mouse embryos. The mice born from these embryos are bred with others, to produce offspring with altered genes.

The first mice with genes manipulated in this way were announced in 1989. More than 10,000 different genes in mice have been studied with the technique, the Nobel committee said. That's about half the genes the rodents have.

"Gene targeting has pervaded all fields of biomedicine. Its impact on the understanding of gene function and its benefits to mankind will continue to increase over many years to come," the award citation said.

In a telephone interview from Salt Lake City, Capecchi called the award "a fantastic surprise."

He said he was deep asleep when he got the phone call from the Nobel committee at 3 a.m. local time. "He sounded very serious," Capecchi said, "so the first reaction was, `This must be real.' "

Smithies told The Associated Press getting award was "very gratifying." After working on the research for more than 20 years, he said it's "rather enjoyable being recognized at this level."

Smithies said he hopes winning the prize will make it easier to secure funding for other work.

Although gene targeting uses embryonic stem cells from mice, it is different from how stem cells would be used to treat disease in humans. In people, stem cells would be prodded to become replacement tissue like nerve cells for transplant into patients.

Capecchi's work has uncovered the roles of genes involved in organ development in mammals, the committee said. Evans has developed strains of gene-altered mice to study cystic fibrosis, and Smithies has created strains to study such conditions as high blood pressure and heart disease.

The medicine prize was the first of the six prestigious awards to be announced this year. The others are chemistry, physics, literature, peace and economics.

The prizes are handed out every year on Dec. 10, the anniversary of award founder Alfred Nobel's death in 1896.