Academy president Dr Ainomaija Haarla said this was the first time the prize had been given to two people.
"The Prize Committee decided, for the first time in the Millennium Technology Prize’s 10-year history, to award the Grand Prize to two innovators," he said in a media release.
"Dr Shinya Yamanaka's work in stem cell research and Linus Torvalds’s work in open source software have transformed their fields and will remain important for generations to come.
"The International Selection Committee has to judge whether an innovation has had a favourable impact on people’s lives and assess its potential for further development to benefit humanity in the future. The innovations of both this year’s winners embody that principle.
"Dr Shinya Yamanaka’s discovery of a new method to develop pluripotent stem cells for medical research could help combat intractable diseases. And Linus Torvalds’s work has kept the web open for the pursuit of knowledge and for the benefit of humanity – not simply for financial interests."
Torvalds said he was honoured to be the joint recipient of the prize. "This recognition is particularly important to me given that it's given by the Technology Academy of Finland. Thank you to the International Selection Committee and the TAF Board," he said.
"I'd also like to thank all the people I've worked with, who have helped make the project not only such a technical success, but have made it so fun and interesting."
Dr Yamanaka said it was honour to be named as joint winner of one of the world’s most important science and technology awards. "I am not accepting this on behalf of myself alone. The discovery of induced pluripotent stem cells could not have been achieved without tremendous efforts by students and technicians in my laboratory," he said.
"My mission now is to advance iPS cell research in cooperation with many researchers around the world and bring the technology to medicine as early as possible. I will continue to work hard to achieve our goals of developing new drugs and medical treatments to intractable diseases by using iPS cell technology."
The Millennium Technology Prize is presented every two years. Previous winners have included web inventor Sir Tim Berners-Lee and Professor Shuji Nakamura, inventor of coloured LEDs and a blue laser.