The Real Madrid and Portugal forward was announced as the winner at Monday's ceremony in Zurich.
Ronaldo beat fellow finalists Lionel Messi and Antoine Griezmann to the new FIFA honour, the trio having topped a shortlist of 23 global stars.
The triumph adds to the Ballon d'Or crown the 31-year-old picked up last month, which was the fourth of his career.
"Wow, wow, wow – it is incredible," Ronaldo said after being presented with the award by FIFA president Gianni Infantino.
"I'm really happy. I tell you 2016 was the best year of my career. I had a lot of doubts, but at the end of it the trophies speak for themselves.
"They show I have lived up to the expectations and I achieved the best I could. This achievement is incredible. I will never forget this year."
Ronaldo claims both of the game's top individual honours after an astonishing year.
He scored the winning spot-kick as Madrid beat city rivals Atletico Madrid in a penalty shoot-out to win the Champions League, having struck 16 times throughout the competition.
Ronaldo also netted a hat-trick in the Club World Cup final as Madrid beat Kashima Antlers 4-2 after extra time in a thrilling contest.
A first major international trophy also arrived with Portugal emerging as the surprise winners of Euro 2016, Ronaldo scoring three times during the competition before suffering an injury in the final against France and willing his team to victory from the touchline.
He scored 55 goals from a total of 57 appearances for club and country across 2016.
In the night's other awards Claudio Ranieri scooped the men's coaching prize after Leicester City's incredible run to win the Premier League title.
"What happened last year was something strange. The God of football said Leicester must win," said Ranieri, who was in his first season at the unfashionable provincial club widely tipped for relegation.
Ranieri collected his trophy from Diego Maradona, who earlier Monday played in an exhibition match with other retired greats at FIFA headquarters.
Like Ronaldo, Carli Lloyd of the United States won a FIFA player prize for the second year in a row.
Lloyd won despite Germany midfielder Melanie Behringer playing on the Olympic gold medal-winning team. Five-time winner Marta was runner-up and Behringer was third.
"I honestly was not expecting this," Lloyd said. "I know Melanie did fantastic in the 2016 Olympics."
Germany did win the women's coaching prize as Silvia Neid earned her second FIFA prize, after also winning the 2010 award. Neid beat two previous winners: Pia Sundhage of Sweden, the Olympic silver medalist, and last year's winner, Jill Ellis of the United States.
The Puskas Award for best goal was won by Mohd Faiz Subri, who scored with a wildly swerving long-range free kick for Malaysian club Penang.
🏆 Here is that sensational free-kick which won Mohd Faiz bin Subri the Puskas Award 🏆 pic.twitter.com/LUr0757HLr
— MARCA in English (@MARCAinENGLISH) January 9, 2017
A players' vote organized by international union FIFPro gave a World XI of: Manuel Neuer (Germany, Bayern Munich); Dani Alves (Brazil, Barcelona/Juventus), Sergio Ramos (Spain, Real Madrid), Gerard Pique (Spain, Barcelona), Marcelo (Brazil, Real Madrid); Toni Kroos (Germany, Real Madrid), Andres Iniesta (Spain, Barcelona), Luka Modric (Croatia, Real Madrid); Messi, Luis Suarez (Uruguay, Barcelona), Ronaldo.
The First FIFA fan award was chosen by fans and was made to supporters of Liverpool and Borussia Dortmund, who joined in singing the English club's anthem "You'll Never Walk Alone" before a Europa League quarterfinal. The other nominees were Iceland fans at Euro 2016, and Dutch club ADO Den Haag, whose fans brought soft toys to children supporting rival team Feyenoord.
FIFA made its Fair Play Award to Atletico Nacional, the Colombian club which was scheduled to host Chapecoense in the first leg of the Copa Sudamericana final on Nov. 30.
The award is a modernisation of the FIFA World Player of the Year, which was last won by Messi in 2009 and had been given to Ronaldo once – in 2008 – before the merger with France Football created the FIFA Ballon d'Or.
But the world game's governing body ended that collaboration last year and the winner was selected via a voting process involving national team coaches and captains, selected members of the media, and an online fan poll.