The 27-year-old actress beat Hollywood stars such as Megan Fox, Angelina Jolie and Blake Lively and came in ahead of her Bollywood contemporaries including Freida Pinto, Deepika Padukone and Priyanka Chopra.
Speaking to The Times of India, Kaif said: "I am really excited with the news since it means people are not voting for me only based on my physical looks. They are looking at me in entirety."
When asked what sexy means to her, she said: "Being sexy is not about the clothes. The sexiest thing is not trying. For me to wear a cotton sari, be without make-up and to still be desirable is sexy."
Kaif is currently in the UK shooting for Yash Chopra's untitled film with Shah Rukh Khan.
She will be seen next in Kabir Khan's Ek Tha Tiger opposite Salman Khan.
The film releases on August 15, 2012.
Watch the trailer for Ek Tha Tiger below: