News agency AFP reports that the man is a student and asylum seeker from Mexico though his motives were unknown.
Seconds after receiving her medal and diploma at Oslo City Hall, Malala was approached by the man who unfurled the flag. According to the Norwegian newspaper VG, he said "please Malala, talk about Mexico." Neither laureate was harmed.
The man was quickly detained by security guards and arrested, according to news agency TT. He was wearing glasses, a suit and tie and carrying a camera around his neck along with the flag.
A Pakistani schoolgirl fighting for the rights of children, Malala is the youngest ever Nobel laureate and shares the peace prize with Indian child rights campaigner Kailash Satyarthi. In her speech afterwards, Malama Yousafzai said that she will donate the prize money, SEK 4 Million, to the Malala-foundation. It will be used to build schools in Pakistan, in particular in the Swat and Shangla areas.
"I loved going to school in the Swat valley," she said. "But when I was ten years old, Swat changed from being a beautiful tourist attraction to a centre for terrorism. More than 400 schools were destroyed. Girls were no longer allowed to go to school. Education was no longer a right, it became a crime. I had two choices - to be silent until I was killed or to raise my voice, and then be killed."
"The so-called world of adults may understand it, but we children don't. Why is it that countries which we call 'strong' are so powerful in creating wars but so weak in bringing peace?" she said.
"Why is it that giving guns is so easy but giving books is so hard? Why is it that making tanks is so easy, but building schools is so difficult?"
In his speech, Kailash Satyarthi, called for the liberation of all children. "My only goal here in life is that every child is allowed to be a child, to grow and develop, to eat, sleep see the dailight, to smile and cry, to play and learn, to go to school, and most of all: to dream," he said.
The peace prize is the only Nobel award handed out in Oslo, with all others here in Stockholm. When the Swedish inventor of dynamite Alfred Nobel created his famous awards, Sweden and Norway were joined in a union.