Dhoni was chosen for the ICC Spirit of Cricket Award for his fine gesture of recalling Ian Bell after the England batsman was run out under controversial circumstances during the second Test at Trent Bridge in July.
Tendulkar, who was named Cricketer of the Year in 2010 when the awards function was held in Banagalore, missed out this time.
England`s Jonathan Trott won the top award after beating competition from his national team-mate Alastair Cook and South Africa`s Hashim Amla, besides that of Tendulkar.
India`s opening batsman Gautam Gambhir also missed out the ODI Player of the Year Award which was won by Sri Lanka`s Kumar Sangakkara.
Dhoni turned out to be the lone Indian to win an ICC award this year. Despite being wrapped up in an intense and difficult Test series in England, Dhoni showed the right spirit in agreeing to allow Bell to continue batting when he was run out.
On what was the last ball before tea on the third day, Bell hit the ball towards the boundary. He mistakenly thought it had gone for four, left his crease and headed towards the pavilion assuming the session was over and the ball dead. The ball, which had not reached the rope and therefore was still in play, was returned to the middle, the bails removed and Bell was correctly given run out.
Upon reflection during the tea interval and following a request from the England team, Dhoni withdrew the appeal and recalled Bell thus turning boos into cheers from the appreciative Nottingham crowd.
Commenting on Dhoni`s gesture, ICC Chief Executive Haroon Lorgat said, "While the initial appeal and umpire decision were correct to the letter of the law, the decision by Mahendra and his team to withdraw the appeal shows great maturity. To see players and officials uphold the Great Spirit of cricket, which has underpinned the game for more than a century, is very special."
Dhoni`s gesture was voted as the winner ahead of that of South Africa`s Jacques Kallis, who twice demonstrated such spirit during the ICC Cricket World Cup 2011 by walking once he had clarified with opposition fielders directly that they had caught the ball cleanly rather than waiting for the umpires to decide.
This award is voted by the members of the Emirates Elite Panels of ICC Match Referees and Umpires.
Trott had an extraordinary 12 months as a batsman. In 12 Tests, he compiled 1,042 runs at an average of 65.12, including four centuries and three half-centuries. In addition, he played 24 ODIs, hitting 1,064 runs at an average of 48.36 with two centuries and nine 50s.
In that time he has helped his team retain the Ashes in Australia, reach the quarter-final of the ICC Cricket World Cup 2011 and also register other Test series victories against Sri Lanka, India and Pakistan.
Trott follows in the footsteps of India`s Rahul Dravid (2004), Andrew Flintoff of England and South Africa`s Jacques Kallis (joint winners in 2005), Ricky Ponting of Australia (2006 and 2007), West Indies` Shivnarine Chanderpaul (2008), Mitchell Johnson of Australia (2009) and Tendulkar (2010) to take the top award.
Trott accepted the Sir Garfield Sobers Trophy from ICC President Sharad Pawar at the glittering ceremony.