The new fuel-saving engine, used in the Alfa Romeo MiTo city car and new Giulietta hatchback models, fought off competition from 65 new engines released in the last 12 months to win the award.
It signalled a significant victory for the Italian manufacturer after German car makers dominated the awards, winning nine out of the 12 categories.
On awarding the title to the Fiat Group, which owns Alfa Romeo, the judges said: "This innovative Italian powerplant uses an extremely advanced valvetrain to boost performance and yet save fuel."
The engines were judged by 72 motoring journalists from 35 different countries worldwide. All of the engines were judged on driveability, performance, economy and refinement before the winners were revealed at the Engine Expo 2010.
The 1.4-litre MultiAir Turbo is available in 135 and 170bhp derivatives with the Alfa Romeo MiTo and returns as much as 48.7mpg and CO emissions of 129g/km for entry-level versions.
Fiat plans to use the award-winning MultiAir engine in several new models in future.