The Italian pipped Real Madrid's Zinedine Zidane and Portugal coach Fernando Santos to the award.
Claudio Ranieri has been named FIFA Coach of the Year for 2016 after guiding Leicester City to their remarkable Premier League triumph.
The Italian led the Foxes to their maiden top-flight crown in his first season in charge of the club last term, in one of the greatest shocks in sporting history.
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Leicester's incredible consistency has dropped off this season but they have at least qualified for the Champions League last 16, topping their group to secure a knockout tie with Europa League 2015-16 winners Sevilla.
Ranieri, 65, fended off competition from Real Madrid manager Zinedine Zidane and Portugal coach Fernando Santos to claim the award at FIFA's 'The Best' awards ceremony on Monday.
Zidane guided Real to victory over neighbours Atletico Madrid in last season's Champions League final, as well as the UEFA Super Cup and FIFA Club World Cup in 2016.
He took over from Rafa Benitez with Real in a low ebb following their embarrassing exit from the Copa del Rey and with Barcelona looking comfortable in La Liga.
Santos, on the other hand, managed Portugal to their first major trophy with victory over France in the 2016 European Championship final.
Despite having Cristiano Ronaldo as captain, Portugal went into the tournament unfancied but battled their way to victory after a group stage in which they didn't look convincing at all.
Ranieri entertained the award ceremony audience in Zurich with a typically eccentric speech, saying he felt as though it was fate that Leicester won the Premier League in 2015-16.
"What a fantastic evening for me to be here with a lot of legends and now to win this award," he said upon receiving the award. "I'm crazy! I'm very crazy. Thank you so much those who voted for me.
"I want to thank my family, my wife, my agents, my chairman, my player – my players! Without them it's difficult for a manager to win something, and also our fans. I think what happened in England was amazing, it was something strange. The god of football said 'Leicester must win'. Only this!
Referencing Dani Alves' earlier comments about being in the FIFPro XI despite being a full-back veteran, Ranieri added: "And before Dani Alves said at 30 years old he can do something more. My age is 65! I start now!"
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