Directed by Austria's Michael Haneke, the film tells of mysterious events that befall a rural German village in the years preceding World War I.
Jonathan Ross hosted the event, which saw veteran Italian director Bernardo Bertolucci receive a special award.
Oscar-winning actress Tilda Swinton was among the audience at the BFI Southbank in London at Thursday's ceremony.
Her film I Am Love was one of the five foreign language films shortlisted for this year's honour.
The others nominated were Swedish vampire thriller Let the Right One In, French crime drama A Prophet and Israeli animation Waltz with Bashir.
Haneke did not travel to London to receive his prize, which was accepted on his behalf by White Ribbon cast member Leonie Benesch.
This year's winner was decided by a panel comprising director Sophie Fiennes, screenwriter Christopher Hampton, Bollywood star Aamir Kahn and novelist Bidisha.
The ceremony will be broadcast on BBC Four on Saturday at 2100 BST.
Speaking after the event, Hampton said he had been impressed by The White Ribbon's "precision" and sense of mystery.
"The real sign for me was that the second time I saw it was more extraordinary than the first time," he told the BBC News website.
Attending the ceremony in a wheelchair, the 70-year-old Bertolucci received a rousing reception as he collected his accolade.
"I'm very grateful and honoured," said the director of Last Tango in Paris and The Last Emperor.
"It is very important for me to collect this quite heavy award," he added, going on to praise the "state of the art ramp" that had enabled him to ascend the podium.
Oscar-nominated drama The White Ribbon has been named the winner of this year's BBC Four World Cinema award.