Warne holds the all-time Test wicket record with 708 wickets, while McGrath is the most successful paceman in Test history with 563 wickets.
The duo joined former skipper Mark Taylor (1998) as the only cricketers to receive the award.
Warne and McGrath retired from Test cricket after the fifth Ashes Test in Sydney last year after taking 1001 wickets in 104 matches together.
The Don award was established in 1998 to honour an athlete or athletes who had most inspired the nation in a calendar year.
"This year the performance of Shane Warne and Glenn McGrath in winning the Ashes and the summation of their combined careers with each other captured the imagination of the nation," SAHOF chairman John Bertrand said.
They received the award on Thursday night at the annual Sport Australia Hall of Fame function, where golfer Greg Norman was inducted as the 27th official legend of Australian sport.
"I never miss an opportunity to come home and this is a special moment," Norman said.
Other nominees for The Don award included 400m hurdler Jana Rawlinson, who won a second world title in August, Tour de France runner-up Cadel Evans, seven-time women's surfing world champion Layne Beachley and 50km walk world champion Nathan Deakes.
Former Australian Test captain Steve Waugh, speed skater Steven Bradbury, swimmer Petria Thomas and rower Mike McKay were among seven new inductees to the hall of fame.
Photograph: Simon Fergusson/Getty Images