The 500 beat the new Mazda2 and the new Ford Mondeo.
In addition to winning the Car of the Year 2008 award outright, the 500 obtained votes from most members of the jury: 57 out of 58 included it in their short-list, and 33 made it top in their personal rankings.
This is only the second time an A-segment model has won the award in the world car industry, after the Fiat Panda in 2004.
The 500 was also named CAR magazine's car of the year for 2007.
This brings the total Fiat Group wins to twelve: the Fiat 124 (1967), Fiat 128 (1970), Fiat 127 (1972), Lancia Delta (1980), Fiat Uno (1984), Fiat Tipo (1989), Fiat Punto (1995), Fiat Bravo/Brava (1996), Alfa 156 (1998), Alfa 147 (2001), Fiat Panda (2004) and the Fiat 500 (2008).
The Car of the Year award started in 1964.
To enter, new cars must go on sale in at least five different European markets in the course of the year.
Judgements are expressed on design, comfort, safety, economic operation, driveability, performance, practicality, respect for the environment, price and value for money.
A first selection is made from all the new models marketed in the course of the year (this year 33 cars were involved) and seven are shortlisted.
Each member of the jury has 25 points to distribute among the seven cars, with a maximum of 10 points going to their first choice.