The Blaugrana edge out their El Clasico rivals to take spot in the rankings, which have been comprised by the IFFHS (International Federation of Football History and Statistics).
Barça were ranked with 2,877 points with Madrid second on 2,782 with German giants Bayern Munich completing the top three with a points tally of 2,594.5.
The Catalan giants were the most successful domestic side in the decade by record six La Liga titles – in comparison to just three for Los Blancos – although the Spanish capital side won four Champions League titles in comparison to just two for the Blaugrana.
Barça also won five Copa del Rey titles, two European Super Cups, two Club World Cups and five Spanish Super Cups.
It is the second successive decade for Barcelona news seeing the club ranked as the best in the world by the IFFHS, having also won the gong in the 2001-10 period.