Previously Vancouver held the spot for six years - sharing it with the Australian city from 2002-2004.
Expressing his excitement over the news, Melbourne's lord mayor, Robert Doyle said the "world record is an amazing feat that all Melburnians should be extremely proud of today".
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Hailing it as “an important selling point for Melbourne internationally," Doyle stressed it helps attract international students.
"There will always be naysayers and whingers, and of course we are not perfect," Doyle said. "No great world city is, but we should be very proud of the work we all do together to make Melbourne the best city in the world."
The annual report assesses 140 cities on political stability, health care, culture and environment, education and infrastructure.
Here are the top 10 liveable cities according to The Economist's Intelligence Unit.
This article originally appeared in the Guardian.
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