Kaif landed on the top of a list of ten in a yearly roundup held by the Eastern Eye, a leading Anglo Asian publication.
The judging panel included Brianna Ragel, editor of Asian Woman Magazine and FHM India's former editor Farhad Dadyburjor.
According to Hamant Verma, Eastern Eye's editor, "Katrina Kaif's natural beauty and easy charm has enabled stock to rise in Bollywood. This has resulted in a number of lucrative offers, and appearances in films that proved to be box-office hits."
Katrina, who grew up in the British capital, landed one notch above actress Bipasha Basu, last year's number one, and two above actress Priyanka Chopra, the winner in 2006. Third on the list was actress Kareena Kapoor.
Newcomers to this year's list of the 'sexiest' included Pakistani star Mehvish Kayat at ninth place, Miss India Universe Simran Kaur Mundi in tenth, the former Miss Sri Lanka Jacqueline Fernandez in twelfth and South Indian actress Asin in twenty-second place.
Aishwarya Rai, a former Miss World landed up in seventh place.