Nenshi, who was nominated by Calgarians and other Canadians, has been awarded the 2014 World Mayor Prize.
The urban research group says he has become the "most admired mayor" of any large Canadian city.
It describes him as an urban visionary who doesn't neglect the nitty-gritty of local government.
It says Nenshi is a role model to many in North America and Europe for decisive management, inclusivity and forward thinking.
The mayor of Ghent, Belgium, was the runner-up.
The only other North American mayor to make the Top 10 in the honours given out every two years is from Houston.
"What a great surprise. What a great birthday present even," Nenshi said Monday on his 43rd birthday.
"I understand there were scores of people — Calgarians and Canadians — who wrote in letters of recommendation, who wrote in their own comments. To me that's very humbling. It's very kind of people to take that time."
Nenshi is to be awarded a trophy later this year. An official with the City Mayors Foundation based in London praised Nenshi for his work.
"Mayor Naheed Nenshi is a great communicator and listener. He is sincere when discussing everyday problems with folks in the street and can mesmerize a learned audience when talking about the future of Calgary," said Tann vom Hove.
Vom Hove also praised Nenshi's leadership and management skills, which proved vital in 2013 during extensive southern Alberta flooding that hit Calgary hard. He proved his mettle again during a power outage in the city's downtown that lasted for several days last October.
In thousands of tributes received by the organizers of the World Mayor Project, Calgary citizens described their mayor as honest, inclusive and generous.
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