Spain's triumph at Euro 2008 has seen them leap to the top of Fifa's rankings, while England have dropped six places to 15th.
Luis Aragones' Spain stole the plaudits in Austria and Switzerland and after seeing off Germany in the final, have been rewarded with Fifa's top spot for the first time.
Italy, beaten at the quarter-final stage by Spain, claim second place, while runners-up Germany are ranked third.
Brazil dropped out of the top three for the first time since November 1993, with Argentina suffering a similar fate.
Fabio Capello's England have paid the price for failing to qualify for Euro 2008, as they fall from ninth place to 15th.