The Royal Swedish Academy of Sciences, which chose the winners, said Arnold, 62, conducted the first directed evolution of enzymes, whose uses include "more environmentally friendly manufacturing of chemical substances such as pharmaceuticals and the production of renewable fuels".
The 2018 Nobel Prize in chemistry has been awarded to three scientists who have used evolution to incite a chemical revolution, with the hopes of improving drug discovery and reducing the use of harsh chemicals in industrial processes.
Professor Emeritus George Smith shares the 2018 Nobel Prize in Chemistry with two other researchers, one from Caltech in Pasadena, and the other from the MRC Laboratory in Cambridge.
Pharmaceuticals for rheumatoid arthritis, psoriasis and inflammatory bowel diseases have resulted from their research, as well as antibodies that can neutralise toxins, counteract autoimmune diseases and in some cases cure metastatic cancer.
Sir Gregory, who is Master of Trinity College, Cambridge, said at the time of the call he was sitting at his computer "looking balefully" at his work schedule for the day.
Arnold is the fifth Nobel laureate in chemistry since the award was founded in 1901, and just the second one in the last 54 years. Many other antibodies created in this way are now in clinical trials, such as those developed to fight Alzheimer's disease, according to the Academy.
Smith's development of phage display to link proteins to genes was described by the academy as "brilliant in its simplicity".
The honour recognises his work using a technique called "phage display" to produce new pharmaceutical drugs.
These scientists used evolutionary techniques in the laboratory to create powerful antibodies, enzymes - molecules that speed up chemical reactions - and other important biological molecules.
Dr Smith, reached at his home in Columbia, Missouri, was quick to credit the work of others in his prize.
The academy said that half of the roughly $1.01-million USA prize would be awarded to Arnold and that the other half would be shared by her fellow laureates, Dr. Smith and Dr.
The Royal Swedish Academy of Sciences said the scientists had managed to harness the power of evolution in test tubes.
He concludes, "Very few research breakthroughs are novel".
He built up a collection of phages, with billions of antibody varieties on their surface, and engineered them make them more effective.
He said he has "no idea" what he'll do with the prize money.
A trio of physicists - Arthur Ashkin of the US, Gerard Mourou of France and Donna Strickland of Canada - shared the Physics Prize for inventing optical lasers now used in corrective eye surgery and in industry.
The website of the Nobel Prize points out that numerous people who have won the prize for Chemistry could equally have won the Prize for physics as well. There are an terrible lot of brilliant scientists and there aren't enough Nobel prizes to go around'.
The Nobel chemistry prize, economics prize and peace prize are still to be announced.
There are not very many incentives in faculty contracts for achievements like Nobel Prizes, especially when compared to sports coaches who can earn large payments for wining championships.
On Monday, American James Allison and Japan's Tasuku Honjo won the Nobel medicine prize for groundbreaking work in fighting cancer with the body's own immune system.