The Duchess of Cambridge, who recently gave birth to baby boy Prince George, came in third place on the famous, international list.
The top spot, which the royal held last year, was taken by Django Unchained star Kerry Washington.
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The magazine praised new mum Kate for her impeccable dressing, never failing to impress with her elegance and classic style.
Since becoming a royal after she married Prince William in 2011, Kate has wowed the world with her fashion sense, sparking frenzies after she is spotted wearing something.
One notable outfit is the red Alexander McQueen dress that she wore for the Diamond Jubilee festivities.
Another is a recent outfit – the blue polka dot Jenny Packham dress that Kate wore to leave hospital with her newborn baby and Prince William.
All eyes were on Kate as she stepped out on an official visit for the first time since her pregnancy was revealed. And she far from disappointed, showing off a tiny hint of a baby bump in a patterned wrap Max Mara dress as she visited Hope House in South London.
The Duchess of Cambridge wasn't the only royal to be included on the list – Princess Letizie of Spain and Princess Madeleine of Sweden also made the cut.
Taking the second spot was Justin Timberlake.
"A new first lady-China's Peng Liyuan-sails onto the list, joining three top athletes, pop music's reigning queen, and a Rolling Stone. The Best-Dressed field may be ever shifting, but there's some classic glamour behind the looks of this year's honourees," said the magazine.
Newcomers on the list included Beyoncé and Dita von Teese.
The burlesque dancer said that her favourite piece of clothing is the 'Hussar' gown from Jean Paul Gaultier's 2002 winter haute couture collection. She also revealed that her style icons are "the women of 1940s-era fetist artist John Willie."