It is the first time since 2007 that the award has gone to a player other than Cristiano Ronaldo or Lionel Messi.
The prize completes and fine 12 months for Modric, who won the Champions League with his club at the end of last season and was named Best FIFA Footballer of the Year in September after helping his country reach the World Cup final in Russia, where he was awarded the Golden Ball.
Modric, who is the first Croatian to win the Ballon d’Or, beat off competition from former Real Madrid team-mate Ronaldo, who was second, and France’s World Cup winner Antoine Griezmann in third place.
Griezmann’s international team-mate Kylian Mbappe was named in fourth place, with Messi fifth.
Liverpool’s Mohamed Salah in sixth was the first English-based player in the list, while England skipper Harry Kane was 10th.
Lyon’s Ada Hegerberg was named the first winner of the women’s Ballon d’Or.