It is the fifth time Switzerland's world number one Federer has won the ITF award, based on performances at grand slam events, Tour events, Davis Cup and Fed Cup.
Williams took the award for the second time despite her foul-mouthed outburst at a line judge at this year's US Open.
Williams was fined $175,000 and put on probation for two years by the Grand Slam Committee following the tirade that resulted in her receiving a point penalty and losing her semifinal against Kim Clijsters.
Federer had no such shadow hanging over his season.
"It is an honour for me to be named ITF World Champion for a fifth time," Federer said in an ITF statement. "It was an incredible year for me both on and off the court.
"To win my first Roland Garros title, break the all-time Grand Slam record and regain the No 1 ranking is amazing. It means a lot to me to finish the year again at the top."
Federer took his grand slam haul to 15 with his titles at Roland Garros and Wimbledon.
Williams, who captured the world number one spot at the season finale in Doha, has 11 singles majors after winning the Australian Open and Wimbledon. Serena and sister Venus were named women's doubles World Champions for the first time with Bob and Mike Bryan taking the men's doubles honour for a record sixth time.
