Queenstown ranked third overall behind Sydney and Melbourne and was just pipped for second place by Melbourne.
Travel + Leisure's 11th annual World's Best Awards survey is an independently-audited poll of tens of thousands of sophisticated US travellers. The results were announced last week by Travel + Leisure Australia on behalf of its US parent publication, which uncovers US readers' favourite cities, islands, hotels, cruise lines, airlines, tour companies, spas and car-rental agencies.
Destination Queenstown CEO David Kennedy said Queenstown had reached a level which was close to par with Sydney and Melbourne in terms of quality as a destination.
"We are inching closer and closer to the two top Australian cities. We are the Southern Hemisphere's ultimate four season lake and alpine resort destination and that message is penetrating the international travel markets."
The top 10 cities listed worldwide placed Florence, Rome and Bangkok in first, second and third position respectively, with Sydney dropping from number one in 2005 to fourth position this year.
Mr Kennedy said tourism down under faces constant change and challenge as it operated in a highly competitive global market.
"Fluctuating currencies and the increasing intensity of the competition from popular international destinations, ever improving international standards and increasing innovation are all influencing factors for travellers who make decisions about where and when to travel."
Mr Kennedy said it was good to note that Queenstown's appeal to international travellers continued to rise within a challenging environment.
"On an international level, we are recognised as a sophisticated and cosmopolitan place to visit. Our diverse cuisine, award winning wines, innovative activities and broad range of accommodation combined with Kiwi hospitality in a stunning setting is a quality combination for any traveller considering a visit."
"Events with international appeal can provide an extra motivating factor," he said. "True international events such as last year's Lion's Tour and the Golden Oldies Cricket World Cup in March 2008 serve to push Queenstown into the limelight and boost visitor numbers."