Malala Yousafzai said the money would help children in Gaza get a good-quality education. Photograph: Tt News Agency/Reuters
The Nobel peace prize winner, speaking after receiving the World Children's Prize for the rights of the child in Marienfred, Sweden, on Wednesday, said the money would be channelled through the United Nations relief agency UNRWA to help rebuild 65 schools in the Palestinian territory.
Malala, who now lives in Birmingham, in the UK and has her own fund to help small-scale organisations in a number of countries, including Pakistan, told journalists that children in Gaza had suffered from conflicts and war. The money would help children get "quality education" and continue their life, knowing they were not alone and that people were supporting them, she said.
She is the first person to receive the children's prize and the Nobel in the same year. The Sweden-based organisers of the children's prize said millions of children around the world had voted for Malala.
The children's prize also announced two honorary laureates. John Wood, who quit his job as a Microsoft manager, has spent 15 years working for books, school libraries, and schools for millions of children, through his Room to Read organisation, while Indira Ranamagar from Nepal has fought for 20 years for the rights of the children of convicts to education and to live outside of prisons.
In remarks published on the UNRWA website, Malala said the organisation was performing "heroic work" to serve children in Gaza.
She added: "The needs are overwhelming - more than half of Gaza's population is under 18 years of age. They want and deserve quality education, hope and real opportunities to build a future.
"This funding will help rebuild the 65 schools damaged during the recent conflict. Innocent Palestinian children have suffered terribly and for too long."
Pierre Krähenbühl, UNRWA's commissioner general, said the organisation was "deeply touched" by the gesture. It would "lift the spirits of a quarter of a million UNRWA students in Gaza and boost the morale of our more than 9,000 teaching staff there", he said.
"Their suffering during the fighting was devastating and your kindness will do much to ease the pain of recent months."
He said Malala had "become a symbol of the boundless potential that lies within each and every child on Earth", and she was "an aspirational figure to the next generation in Palestine and beyond" as well as an inspiration to all.