Daley was barely 15 when winning the 10m world platform title
World champions Jenson Button, Tom Daley and Mark Cavendish will battle it out in the breakthrough of the year category of the Laureus Sports Awards.
They are joined by three other Britons to be nominated in other areas.
Jessica Ennis is on the world comeback of the year shortlist, while F1's Brawn GP - now owned by Mercedes - are in the world team of the year running.
Stunt cyclist Danny MacAskill, who is up for the action sports award, makes up the list of British nominations.
Button won his maiden F1 world title last year with Brawn GP in his 11th year of grands prix while sprint specialist Cavendish, from the Isle of Man, won six stages of the 2009 Tour de France.
Daley became the nation's youngest world champion when he shocked the diving world to claim the 10m platform title at the World Championships in Rome last summer just two months after his 15th birthday.
The trio are up against tennis player Juan Martin del Potro, who won last year's US Open, golfer Ji Yai Shin, the US LPGA Tour rookie of the year, and VFL Wolfsburg, winners of the Bundesliga.
Ennis returned from the foot injury which ruled her out of the Beijing Olympic Games to win the heptathlon title at the World Athletics Championships in Berlin last summer.
The Sheffield athlete faces opposition from the likes of fellow athlete Blanka Vlasic, who won the high jump in Berlin, Lance Armstrong, third in the Tour de France after a four-year sojourn aged 37, and Kim Clijsters, the Belgian mother coming out of retirement to claim the US Open tennis title.
Roger Federer and Usain Bolt are among those nominated for world sportsman of the year. Two swimmers, Federica Pellegrini and Britta Steffen, are on the shortlist for world sportswoman.