TripAdvisor is the world's largest travel site, and the awards are based on millions of opinions posted by TripAdvisor travellers.
Leading the pack of top 10 cities, Cape Town also beat Paris, Barcelona, Rio de Janeiro and Rome. In addition, Blackheath Lodge and Derwent House Boutique Hotel, both in Cape Town, were ranked 7th and 8th respectively in the "Top 10 Hotels for Service" category.
Cape Town attractions cited favourably included Table Mountain, Robben Island, Boulder's Beach and the Bo-Kaap.
Walks on Table Mountain were listed as the top attraction.
Western Cape Tourism MEC Alan Winde said he was delighted. "To be ranked first out of all the cities in the world... speaks volumes. (This) will most certainly boost our tourism industry." - Cape Times