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Spain's only consolation was that they had six players in the world team of the year, Iniesta and Xavi joined by Iker Casillas, David Villa, Carles Puyol and Gerard Pique.
Argentina's Lionel Messi won the World Player of the Year for the second time in a row on Monday and Jose Mourinho walked off with the coach's award, leaving Spain's World Cup winners disappointed.
Messi surprisingly held off his Barcelona team mates Andres Iniesta and Xavi to win the newly-created FIFA Ballon D'Or, a fusion of the previously separate annual awards handed out by FIFA and France Football magazine.
Mourinho, now with Real Madrid, won the inaugural Coach of the Year award after leading Inter Milan to a Champions League, Serie A and Italian Cup treble.
The honour went to the self-styled Special One, who described himself afterwards as "proudly Portuguese", at the expense of Spain's World Cup-winning coach Vicente del Bosque and Barcelona's Pep Guardiola.
"The most important trophies for me are the collective ones, not the individual ones but this is a historic trophy for me and Portuguese football," Mourinho told reporters.
Spanish empty-handed
Iniesta and Xavi had been favourites after helping Spain win the World Cup last year while Messi had failed to score a goal or produce his best form at the tournament in South Afica.
"It was just good to be here with my team mates," said Messi, who looked as surprised as anyone by the result which was announced by Barcelona coach Pep Guardiola.
"I'd like to share this with my team mates, without whom I would not be here, and... with all the Argentines."
It was the first time the award had been made since the decision to unite FIFA's World Player of the Year award with France Football magazine's older Ballon D'Or.
Messi won both awards last season. The only Spanish winner of either prize was Luis Suarez who won the Ballon D'Or in 1960.
Spain's only consolation was that they had six players in the world team of the year, Iniesta and Xavi joined by Iker Casillas, David Villa, Carles Puyol and Gerard Pique.
Brazilians Lucio and Maicon, Dutchman Wesley Sneijder, Portugal's Cristiano Ronaldo and Messi completed the line-up.
Votes were cast by the coaches and captains of national teams and by selected journalists. Messi produced some scintillating performances for Barcelona last year, but failed to inspire Argentina who were knocked out in the quarter-finals in South Africa.
A host of other awards were handed out by FIFA with South African Nobel Peace Prize laureate Desmond Tutu and the Haitian women's under-17 team among other winners.
The 79-year-old Tutu, who used his church pulpit as a platform to help bring down apartheid, took the FIFA Presidential Award.
The Haitian team were given the Fair Play award for taking part in the CONCACAF under-17 women's championship in Costa Rica two months after the huge earthquake which devastated their country at the start of last year.
FIFA's goal of the year award went to Turkey's Hamit Altintop for a spectacular volley against Kazahstan and Brazil's Martha was named women's Player of the Year for the fifth time in a row.
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