She was nominated by three Norwegian MPs.
"We have nominated Greta because the climate threat may be one of the most important causes of war and conflict", parliamentary representative Freddy Andre Oevstegaard told Norwegian media outlet VG.
Six months ago as an unknown 15-year-old Ms Thunberg camped outside Sweden's parliament next to a hand-written sign: "SCHOOL STRIKE FOR CLIMATE". "Greta Thunberg has launched a mass movement which I see as a major contribution to peace".
Pakistani activist Malala Yousafzai in 2014 became the youngest victor of the prize, at the age of 17.
The activist, who was named one of TIME's Most Influential Teens of 2018, has inspired hundreds of thousands of students at schools around the world to hold strikes in an effort to urge their leaders to act.
But Friday's protest is billed as the biggest so far.
Thunberg, 16, has encouraged students to skip school to join protests demanding faster action on climate change, a movement that has spread beyond Sweden to other European nations.
Since then, she has been missing lessons most Fridays to stage her regular protests. She has asked world leaders not to ignore the impending consequences of runaway climate change.
Any Norwegian legislator can nominate somebody for the Nobel Peace Prize.
She continued to gain worldwide attention after speaking at the UN Climate Talks in Poland in December and at the World Economic Forum in Davos in January.
National politicians, global officials, academics and previous winners are among those who can nominate potential recipients. While nominations must be submitted before February 1, news that Thunberg is being considered broke Wednesday.
I hope that you will be awarded the Nobel Prize for Peace.
The names of nominators and nominees are not normally made public until 50 years have elapsed, it adds.