In 1980, the journalist and professional philatelist Jakob von Uexkull felt that the Nobel Prize categories were too narrow in scope and too concentrated on the interests of the industrialised countries to be an adequate answer to the challenges now facing humanity.

Instead, he wanted to "recognise the efforts of those who are tackling these issues more directly, coming up with practical answers to challenges like the pollution of our air, soil and water, the danger of nuclear war, the abuse of basic human rights, the destitution and misery of the poor and the over-consumption and spiritual poverty of the wealthy".

The Nobel Prize is considered the highest honour that our society can bestow on an individual. Thus, Jakob von Uexkull approached the Nobel Foundation with the suggestion that it establish two new awards, one for ecology and one relevant to the lives of the poor. He offered to contribute financially but his proposal was turned down. He then decided to set up the Right Livelihood Awards, and provided the initial funding of USD 1 million.

In 1980, the first Right Livelihood Awards were bestowed in a rented hall. Five years later, the invitation to present them in the Swedish Parliament in Stockholm followed. During this time, the public began referring to the Award as the "Alternative Nobel Prize".

The first Recipients in 1980 were Plenty International/Stephen Gaskin, USA, and Hassan Fathy, Egypt. They shared the total prize money of USD 50,000.

Over the years, the Right Livelihood Award Foundation has grown thanks to the support of other private donors. Today, the prize money is 150,000 €.