Fawad Mohammadi and Jawanmard Paiz, both 14, donned tuxedos for the ceremony after traveling from Kabul to Los Angeles for a trip down the red carpet.
The 28-minute movie is about two penniless young boys — a street urchin and a blacksmith's son — who are best friends and dream of becoming professional players of buzkashi, a particularly rough and dangerous game that somewhat resembles polo: Horseback riders wrangle to get a headless goat carcass into a circular goal at one end of the field.
Fawad's brothers got up early to watch the show, which began at 6 am Monday in Kabul, on an Internet feed provided by The Associated Press. They didn't flinch as actor Jamie Foxx announced that "Curfew" was the winner in the live action short film category.
"Although the movie didn't win, I'm very happy that Fawad made it to such a place. I'm very happy for him.
At the same time he is my brother and I miss him," said Fawad's 19-year-old brother, Ahmad Jawad Mohammadi.
"Buzkashi Boys" was directed by Sam French, a Philadelphia native who has lived in Afghanistan for about five years, and funded in large part with a grant of more than $200,000 from the US Embassy in Kabul as part of an effort to encourage Afghans to see the parts of their country that aren't mired in conflict.
Jawanmard, who has been acting since he was five, played the street peddler while Fawad was the blacksmith's son.
The movie — the first installment in a project aimed at training local film industry workers — gained international attention when it received an Academy Awards nomination. 
Fawad's story got special attention because he was discovered by French while peddling maps to foreigners in the Afghan capital, one of an untold number of Afghan youths hustling in the streets to help earn money for their families.
He started selling chewing gum when he was about seven years old and soon expanded his trade to maps and dictionaries, learning to speak English during his interactions with foreigners on Chicken Street, an area in Kabul with shops selling multicolor rugs, crafts and souvenirs.
He was even able to enroll in a private school, thanks to the generosity of some other foreigners unrelated to the film project.
His brother-in-law said it was an important first step for Fawad to act in such a high-profile film and appear among the rich and famous at the Oscars.
"Fawad is not only my relative ... he is a source of pride for Afghanistan. This time he made it to the Oscars. Maybe next time he will win," Mohammad Fahim Nadri said.
French raised nearly $12,000 in an effort to get the boys to Hollywood, but Turkish Airlines and the US Embassy in Kabul stepped in to cover travel costs so he is putting the money instead into a college fund for Fawad.