The midfielder was in a three-way battle with Cristiano Ronaldo and Mohamed Salah for the prize at a star-studded event in London on Monday evening.
Modric lifted the Champions League trophy with Madrid at the end of May before captaining Croatia at the World Cup in Russia where they finished runners-up behind France.
The nominees were voted for by national team coaches (25%), national team captains (25%), select media representatives (25%) and an online vote (25%).
After receiving the award, Modric said: I would like to congratulate Mohamed and Cristiano for the great seasons they had.
This is not just mine its for all my Madrid team-mates, all my Croatian team-mates and all coaches the Ive played for – without them this would not be possible.
This is also for my family and without them I would not be the player and person I am. They are the best.
Thanks to my fans all over the world for great support and love they are showing me. It means a lot to me and I would like to thank those who voted for me.
All the winners at the Best FIFA Awards 2018
FIFA Puskas Goal of the Year
Mohamed Salah (Liverpool) vs Everton
Coach of the Year
Didier Deschamps (France)
Goalkeeper of the Year
Thibaut Courtois (Chelsea/Real Madrid/Belgium)
Best Womens Coach
Reynald Pedros (Lyon)
FIFA Fan Award
Fair Play Award
Best Womens Award
Marta (Orlando Pride/Brazil)
Best Mens Award
Luka Modric (Real Madrid/Croatia)
Modric was also selected in the Fifpro World XI and was joined by Premier League stars David De Gea, NGolo Kante and Eden Hazard.
Fifpro World XI
Alves – Varane – Ramos – Marcelo
Modric – Kante
Hazard – Messi – Mbappe
Salah lifted the Puskas award for the best goal of the last 12 months after his stunning effort for Liverpool against arch-rivals Everton.
Nothing much to say about that but Im very happy and very proud, the Egyptian said after winning the Puskas award.
I have to thank everyone who voted for me. Looking forward for another award tonight!