Two Americans and a Briton who have been pioneers in the controversial field of genetic engineering were jointly awarded the 1980 Noble Prize in chemistry yesterday.

The selection of two Americans to share in the chemistry award and two others for the physics award, also announced yesterday in Stockholm, continued U.S. dominance of the Nobel science prizes in the past several years.

The award also underscores the importance that the Swedish Academy of Sciences, which selects the Nobel science winners, and much of the scientific world attaches to the sensitive field of genetics, which has produced 20 Nobel laureates in the past two decades.

The three researchers honored yesterday were Paul Berg, 54, of Stanford University, who will receive half of the $212,000 prize and Walter Gilbert, 48, of Harvard and Frederick Sanger, 62, of Cambridge University in England, who will share the other half.

Berg is considered the "father of genetic engineering," which involves manipulation of gene structures, and also was one of the first genetic researchers to urge a moratorium on such activities, which some scientists and lay persons have warned could produce dangerous new forms of life.

He arthered to the moratorium from 1974 until two years ago, when guidelines intended to control such research were developed and put into effect by the National Institutes of Health.

Sanger won the Nobel chemistry prize in 1958 for research in the chemical makeup of proteins, which set the stage for his present work. The British professor is only the fourth person to win more than one Nobel prize.

The Swedish academy said in its citation that "the investigation of Berg, Gilbert and Sanger have given us a detailed insight into the chemical basis of the genetic machinery in living organisms."

"They have already formed the foundation for important technical applications," the citation said of the work by the three. "In a extended perspective they will certainly play a decisive role in our efforts to understand the nature of cancer, as in this disease there is a malfunction in the control, by the genetic material, of the growth and division of cells."

Both Gilbert and Sanger are receiving the prize for work on the same fundamental problem working on DNA (deoxyribonucleic acid) and reading the fine details of its structure. This knowledge has already begun to be useful in deciphering and trying to cure many genetic diseases.

DNA is a long, ladder-like string of chemicals contained in all cells and holding all the genes of any organism from bacteria to man. The sequence of the chemical rungs in the ladder serves as the blue print, the instructions for building and running every living creature.

The particular sequence of the chemical rungs in the long DNA ladder is what makes up the "code" of the DNA. This code is read and used by the cell in determining each cell's function -- whether it is a heart cell or a skin cell -- and in what way the cell should function.

Sanger, and then later Gilbert, each came up with a method of actually reading the DNA code, rung by rung. This means that we can now know the exact chemical construction of genes, and we can see clearly which rungs are missing or defective -- a cause of some genetic diseases. These techniques also help make it possible to isolate and remove specific genes so that they may be transplanted into other animals or even other species.

Sanger was the first to work out an effective method to read the order of the chemicals along the DNA, but Sanger's first method took months to decipher the order of only a couple dozen rungs in the ladder. The whole DNA strand is billions of units long, and a single gene with all its attendant parts may be hundreds of units long.

Gilbert later worked out a simpler, quicker method of doing the same thing. It takes days instead of months, and can decode up to a hundred rungs at once. i

Sanger, in an interview yesterday in Cambridge with the Associated Press, likened the method of reading DNA to reading a book. "In a book, the information is encoded in the order of the letters of the alphabet," he said. "If you can read this information, you can understand the book. I hope our work can be of use in medical research. There are lots of diseases that are probably due to mistakes in DNA, genetic mistakes. These include sickle-cell anemia."

Berg pioneered in the construction of a recombinant DNA molecule, one that can contain DNA from more than one species. It is this work, often called genetic engineering, that has led to fears of possible frightening results from what some call "tampering" with the basic building-blocs of life.

The technique called "recombinant DNA" is a method of taking one or several genes from one organism and implanting them in another organism -- either of the same or of another species. Each gene has its own abilities. Most of them make an enzyme or other useful protein. Thus, recombinant DNA techniques can transfer the ability to make these special chemicals from one animal to another, or even one species to another.

In the case of human insulin, which is a protein, the gene that causes it to be made has been isolated and put into bacteria. These bacteria, which have no use for the protein, nonetheless produce it when the insulin gene has been implanted. The insulin can be cheaply harvested for use by diabetics.

Gilbert achieved a breakthrough two years ago when he discovered methods of inducing bacteria to produce insulin.