Tendulkar was the highest run-getter with 403 runs in the two-match series, which India won 2-0.
Tendulkar also scored his sixth double hundred and was adjudged Man-of-the-series.
The Indian batting legend has now 891 rating points, according to the latest ICC rankings list.
Virender Sehwag is the next best Indian at number three with 819 points, behind Sri Lankan Kumar Sangakkara (874).
It is the first time in eight years that Tendulkar has topped the batting table. The last time he achieved the number one rank was in August 2002 when he scored 193 in his 99th Test to help India beat England by an innings and 46 runs at Headingley.
Overall, it is the ninth time that Tendulkar has claimed the number-one ranking which he first achieved in his 33rd Test on 18 November 1994 after scoring 34 and 85 against the West Indies in the Mumbai Test which India won by 96 runs.
Tendulkar had entered in the two-Test series in fourth position on 809 ratings points. But in the two Tests, he collected 82 ratings points – thanks to his series aggregate of 430 runs.
Australia captain Ricky Ponting is the other batsman from inside the top 20 to make an upward movement. The Tasmanian scored 77 and 72, and was rewarded with a jump of three places which puts him in 16th position.
However, Ponting's vice-captain Michael Clarke and opener Simon Katich have failed to retain their positions. Clarke has fallen five places to 13th while Katich has slipped two places to 14th.
For India, Rahul Dravid has retained his 22nd position and VVS Laxman has stayed in eighth spot despite missing the Test but Murali Vijay has jumped 29 places to 57th position after scoring 139 and 37.
In the rankings for Test bowlers, Zaheer Khan, Harbhajan Singh and Ben Hilfenhaus have gained one place each.
Zaheer now sits in fourth position after match figures of 4-125, Harbhajan rises to eighth places after figures of 6-211 while Hilfenhaus is now in 19th place after claiming 2-104 in the match.
The bowling rankings are led by Dale Steyn of South Africa with England off-spinner Graeme Swann in second position.
There is no change in the top five in the rankings for all rounders. Jacques Kallis of South Africa leads the pack with New Zealand captain Daniel Vettori in second position.