At last night's ceremony in Paris, Ronaldo came in second place, with France and Atletico Madrid striker Antoine Griezmann completing the podium.
Paris St Germain's France forward Kylian Mbappe, who also collected the Kopa award for the best under-21 player, was fourth, with Barca forward Messi finishing fifth.
Modric won his third UEFA Champions League in May and played in Croatia to help his team to reach their first World Cup final.
"It's a unique feeling".
The midfield star becomes the first ever Croatian to win the Ballon d'Or.
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Modric started his career at Dinamo Zagreb at age 16, then he joined the Premier League's Tottenham Hotspur in 2008 and transferred to Real Madrid in 2012.
"I'm happy that I am the victor, but this award is also for all these players that probably deserved to win and didn't".
"But, like I told you, I would change all of this for a World Cup".
He has also won individual medals along the way with the Golden Ball for the best player at the World Cup to the Federation Internationale de Football Association award "The Best" in September.
The last player to lift the award apart from the Argentine and Portuguese, who have won it a joint-record five times each, was Kaka in 2007 when the Brazilian played for AC Milan.
For the first time in history a Croatian is the proud owner of the most prestigious individual award in football, the Ballon d'or.