The Real Madrid midfielder, 33, beat former team-mate Cristiano Ronaldo, now with Juventus, and Liverpool’s Mohamed Salah to the award.
Modric won his third Champions League title in a row in May and guided Croatia to their first World Cup final in July.
Brazil and Orlando Pride forward Marta won the best female player award, while France’s Didier Deschamps – whose side beat Modric’s Croatia 4-2 in the World Cup final – was named best men’s coach.
Salah received the Puskas award for the best goal, for his effort against Everton in the Premier League at Anfield last December.
Peru’s fans are awarded the Fifa Fan Award after many thousands of them flew to Russia in support of their nation’s first participation in the tournament since 1978. This accolade was voted purely by supporters.
What’s the difference between the Ballon d’Or and Best Fifa?
A version of the Ballon d’Or has been awarded by France Football magazine since 1956, but was merged with Fifa’s World Footballer of the Year award from 2010 to 2015.
Voting for the player and coach categories was conducted by national team captains and managers, selected journalists and, for the first time, an online poll of fans. Each accounted for 25% of the total.
Modric made 56 appearances for club and country as he won the Champions League and reached the World Cup final – beating England in the semi-final – in what he admitted before the ceremony was his “best season ever”.
Former England international Chris Waddle, working as a BBC Radio 5 live pundit, indentified Modric as the type of player that Gareth Southgate’s men were missing in that semi-final because of his ability to single-handedly influence games with his understanding and distribution.
The former Tottenham midfielder won the Golden Ball award for the best player in the World Cup after their final defeat by France.
He scored in Croatia’s opening two matches of the group stages and also set up one goal.
Croatia manager Zlatko Dalic paid tribute to his captain after the result was announced, saying the midfielder is like “my assistant in the field”.
After receiving the award, Modric said he was “honoured” and thankful to all the coaches he has worked with for getting him to this stage.
“This award is not just mine. It is my team-mates from Real Madrid and Croatia. Without my coaches, I would not have won this and without my family I would not be the player I am today,” said Modric.
Best Fifa women’s player – Marta
Brazil and Orlando Pride forward Marta won the award for the best female player for the sixth time.
She led Brazil to the Copa America in April, as they won all seven matches – although she only scored one of their 31 goals.
Marta scored 13 goals and set up six more as Orlando Pride reached the NWSL play-off semi-finals in the United States – earning herself a place in the league’s team of the year.
Fifpro World XI
Fifa made five changes to the side selected in 2017.
Kylian Mbappe, 19, was rewarded with a place in the side after winning the award for the best young player at this summer’s World Cup for his impressive performances for France.
There was also room for Chelsea and Belgium forward Eden Hazard, and his club mate N’Golo Kante, while Manchester United’s David de Gea was named in goal and Real Madrid’s Raphael Varane took his place in the heart of the defence.
However, Thibaut Courtois, who was voted as the best goalkeeper in the world, and best men’s player of the year finalist Salah, were not included in the World XI.
Best men’s coach – Didier Deschamps
The former Marseille, Juventus and Chelsea midfielder captained his country as they won the World Cup in 1998, before guiding them to victory again in Russia in July.
Deschamps won the trophy ahead of former club and international team-mate Zinedine Zidane – who won his third successive Champions League title before resigning as Real Madrid manager – and Croatia manager Zlatko Dalic, whose side lost to France in a thrilling final in Moscow.
Best Women’s coach – Reynald Pedros
Former France men’s midfielder Pedros took Lyon to the Ligue 1-Champions League double in his first season in charge.
Testament to Pedros’ spell in charge of the French and European champions is that two of his players, Ada Hegerberg and Dzsenifer Marozsan, were nominated for the best women’s player award.
Puskas award for best goal – Mohamed Salah
Mohamed Salah’s stunning effort to open the scoring for Liverpool in his first Merseyside derby was the winner.
The Egyptian’s sublime curling finish towards the end of the first half at snowy Anfield in December 2017, was later cancelled out by a Wayne Rooney penalty as both sides played out a 1-1 draw.
Salah was chosen as the best of 10 goals, including Cristiano Ronaldo’s overhead kick against Juventus and Gareth Bales’ similarly acrobatic finish in the Champions League final against Liverpool.
Best goalkeeper – Thibaut Courtois
Courtois played every minute of Belgium’s seven matches at the World Cup, as the country went on to claim third place – their highest ever finish at the tournament.
The 26-year-old came above Leicester City and Denmark’s number one Kasper Schmeichel, and Tottenham’s World Cup-winning goalkeeper Hugo Lloris, who captained his country to lift the famous trophy in Russia.
VVV-Venlo striker Lennart Thy missed his side’s Eredivisie game against PSV Eindhoven in March to donate stem cells to try and help a Leukaemia patient.
The 26-year-old German, who was on loan at the top-flight Dutch club from Werder Bremen, joined the donor register seven years ago and was a DNA match.
And Peru fans won the FIFA Fan Award