The 26-year-old Russian, who broke the pole vault world record three times in 2008, defended her Olympic crown with a record breaking vault of 5.05m at the Olympic Games in Beijing.
The athlete, who was also named athlete of the year in 2004 and 2005 after becoming the first woman to clear 5 meters, said, "I'm very proud. It feels like the first time."
Isinbayeva, who along with the title received a trophy and a $100,000 bonus, said her goal is to defend her Olympic title at the 2012 Summer Olympic Games in London.
"I plan to defend my champion tile at the Olympics in London...Of course, I am planning to break 10-15 world records," said Isinbayeva, who has previously broken the world record 24 times.
The Russian sports star said that her main rival was herself and she always felt incredible stress before every competition.
"I am always nervous as I have to win all competitions. If I lose it would be a great sensation and I don't want to cause a sensation," she said.
The award was introduced in 1988 by the European Athletics Association (IAAF) and is awarded based on the results of a public vote.
Three-time Olympic champion, Jamaican Sprinter Usain Bolt, won the men's World Athlete of the Year for his performance in winning three golds in Beijing in the 100m, 200m and 4x100 relay, breaking world records in all three events.
