The Sliding Doors star, who lives in London with her Coldplay singer husband Chris Martin, beat out competition from supermodel Kate Moss and actress Thandie Newton, in second and third place respectively.
The fashion bible claims Paltrow's transformation from American girl-next-door to edgy Londoner grabbed their attention.
Fashion editor Sara Buys says, "Gwyneth used to embody the idea of the East Coast, privileged, all-American girl.
"Since she started living in the U.K. full time, she has developed a less polished, more daring style that owes its origins to London's street style."
The Top Ten best-dressed British women is as follows:
2. Kate Moss
4. Liberty Ross
6. Laura Bailey
8. Yasmin Le Bon
9. Zadie Smith
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