The Real Madrid superstar finished above usual suspects Cristiano Ronaldo and Lionel Messi, ending their ten-year stranglehold on the award.
Juventus star Ronaldo came second after winning the previous two years.
While France and Atletico Madrid ace Antoine Griezmann ended up third, with Messi finishing fifth behind PSG's Kylian Mbappe, who won the inaugural Kopa Trophy for youngsters.
But there was just one person Modric wanted to thank for the achievement, telling the audience: “It’s an unbelievable feeling. It’s a big pleasure to be here among all these players.
“I am still trying to realise that I have become part of a group of exceptional players to win the Ballon d’Or throughout history.
Ballon d'Or 2018 results
29th: Hugo Lloris (France, Spurs)
29th: Isco (Spain, Real Madrid)
25th: Jan Oblak (Slovenia, Atletico Madrid)
25th: Mario Mandzukic (Croatia, Juventus)
25th: Alisson (Brazil, Roma & Liverpool)
22nd: Marcelo (Brazil, Real Madrid)
22nd: Sadio Mane (Senegal, Liverpool)
22nd: Edinson Cavani (Uruguay, PSG)
19th: Sergio Ramos (Spain, Real Madrid)
19th: Ivan Rakitic (Croatia, Barcelona)
19th: Roberto Firmino (Brazil, Liverpool)
17th: Karim Benzema (France, Real Madrid)
17th: Gareth Bale (Wales, Real Madrid)
16th: Sergio Aguero (Argentina, Man City)
15th: Paul Pogba (France, Man Utd)
14th: Thibaut Courtois (Belgium, Chelsea & Real Madrid)
13th: Luis Suarez (Uruguay, Barcelona)
12th: Neymar (Brazil, PSG)
11th: N’Golo Kante (France, Chelsea)
10th: Harry Kane (England, Spurs)
9th: Kevin De Bruyne (Belgium, Man City)
8th: Eden Hazard (Belgium, Chelsea)
7th: Raphael Varane (France, Real Madrid)
6th: Mo Salah (Egypt, Liverpool)
5th: Lionel Messi (Argentina, Barcelona)
4th: Kylian Mbappe (France, PSG)
3rd: Antoine Griezmann (France, Atletico Madrid)
2nd: Cristiano Ronaldo (Portugal, Real Madrid & Juventus)
1st: Luka Modric (Croatia, Real Madrid)
“The change of position helped me a lot in my career. I used to play more offensively.
"When I dropped back, I was able to read the game better and show my creativity. Harry Redknapp made that change.”
Modric had an incredible 2018, leading Real to their third consecutive Champions League trophy under Zinedine Zidane.
Things then got even better as he captained Croatia to their first-ever World Cup final during the summer tournament in Russia.
And despite losing in the final to France, Modric was named Player of the Tournament.
The Premier League had four representatives in the top ten, with Liverpool winger Mohamed Salah finishing sixth.
Chelsea ace Eden Hazard was in eighth behind Real’s Raphael Varane, with Man City’s Kevin De Bruyne ninth and Spurs striker Harry Kane tenth.
There was also room for N’Golo Kante to end up in 11th, one place ahead of Brazil superstar Neymar.
But there was an awkward moment when French DJ Martin Solveig asked the winner of the first-ever women’s Ballon d’Or, Ada Hegerberg, to twerk on stage, leading to the Lyon star storming off stage.
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