Nine prisoners, including two Australians, were executed by firing squad in Bali earlier in the week.
The Daily Mail has reported that the Australian Catholic University (ACU) was part of the global campaign that advocated for mercy for the two Sydney men, before they were killed by firing squad.
Vice-Chancellor Professor Greg Craven said ACU is against the death penalty. He said he hopes the scholarships will help in a "small but deeply symbolic way" to be part of the "on-going contribution toward the eventual abolition of the death penalty in Indonesia."
Andrew Chan and Myuran Sukumaran spent 10 years behind bars in Bali for their role in trying to smuggle 8.3kg of heroin into Australia from Indonesia in 2005.
During that time Chan became a Christian and an ordained priest, while Sukumaran became a talented artist who conducted art classes for other inmates.
ACU's Mr Craven said: "While our calls for mercy for Mr Chan and Mr Sukumaran were ultimately rejected, we strongly believe that hope remains for prisoners around the world who face a similar fate.
"The death penalty is a violent, cruel and immoral punishment that has no place in our society. And yet it persists.
"In memory of Mr Chan and Mr Sukumaran, each of us can take action to end this punishment."
The two Indonesian students that achieve the scholarships will have the opportunity to study undergraduate degrees for free at any of ACU's campuses around Australia.
"These will be awarded to academically qualified applicants upon the submission of an essay on the theme of "the sanctity of human life," said Mr Craven.
"The scholarships would be a fitting tribute to the reformation, courage and dignity of the two men."
