The Spanish football club are valued at £2.08bn, with American football side Dallas Cowboys and baseball's New York Yankees (£2.04bn) in joint second.
Real's La Liga rivals Barcelona (£2.02bn) are fourth.
Premier League club Manchester United (£1.98bn) drop from third to fifth.
The other places in the top 10 are taken by American sports teams: NBA pair Los Angeles Lakers and New York Knicks, NFL sides New England Patriots and Washington Redskins and MLB's Los Angeles Dodgers.
Of the other Premier League sides, Manchester City (£890m) are 29th overall, two places ahead of Chelsea (£877m), with Arsenal 36th having been valued at £839m.
According to Forbes, the average current value of a team on the list is £1.12bn, which is the highest ever, and a 31% increase from last year.
Real Madrid are the world's most valuable sports team for the third straight year, according to business magazine Forbes.