It's not the first time Ardern has placed highly on Fortune's list: In 2019 she placed second behind Bill and Melinda Gates.
The Gateses do not feature in the top 50 list in 2021.
Ardern placed ahead of the "mRNA Pioneers" – the scientist behind the development of the Covid-19 vaccine.
She was also ahead of the likes of NFL superstar Tom Brady, human rights icon Malala Yousafzai and quirky cooking show frontman Guy Fieri.
"Jacinda Ardern had already sealed her position as a great leader early in her premiership of New Zealand, by empathetically steering her country through the aftermath of a terror attack and the deadly eruption of a volcano," Fortune said.
Ardern's decision that her, and her Cabinet ministers would take a six-month, 20 per cent pay cut in 2020 to "show solidarity with people who had lost their livelihoods" due to Covid-19 was another reason behind her number one ranking.
"She has also adopted world-leading climate and gender-equity policies.
"And last year, Ardern's administration made it easier for women to negotiate with their employers for more equitable pay."
This is Fortune's eighth annual list of the world's greatest leaders.
The 2021 list focused heavily on the response to Covid-19 and how people showed leadership through the crisis.
"These individuals rose to meet the challenges of the pandemic, social and economic upheaval," Fortune said.
"Many countries besides the US were slow to confront the new reality of Covid-19. By contrast, the administration of New Zealand Prime Minister Jacinda Ardern began screening arriving airline passengers from China in January 2020, before the disease had a name."
