The report, compiled by the University of Pennsylvania's Think Tanks and Civil Societies Program, examined more than 6,800 think tanks from around the globe across a range of disciplines.
In addition to be being named Australia's best, the Strategic and Defence Studies Centre (SDSC) was listed as the 23rd best university think tank in the world.
Founded in 1966, the Strategic and Defence Studies Centre examines strategic and defence issues effecting the region, with a focus on East Asia and the Pacific.
Research undertaken at the Centre covers the military, political, economic, environmental, scientific and technological aspects of strategic developments, including the control of military force and the peaceful settlement of disputes.
Head of SDSC Professor Brendan Taylor said that the ranking reflected the extremely high quality of research, teaching and outreach undertaken at the Centre.
"This includes our highly successful policy paper series The Centre of Gravity, our work consulting governmental departments and politicians, and our constant work in the media commenting on and analysing the latest trends and developments across the region.
"Ahead of us on the list this year are three centres and institutes from Harvard, three from Stanford, and a handful from Oxford, the London School of Economics, the King's College and Columbia.
"So while we're obviously pleased to be in such good company, here's hoping that with some further effort we might stand a chance of breaking into the top twenty in 2014," he said.
Find out more about SDSC at http://ips.cap.anu.edu.au/sdsc