The perennially popular plastic brick maker grew sales by 6% to 37.9bn Danish kroner ($5.38bn; Â£4.42bn), a slowdown from 25% growth the year before.
Finance chief John Goodwin said its "performance up to 2016 has been absolutely phenomenal, some would say supernatural".
But he said it slowed last year to more "sustainable levels of growth".
Sales were strong in the UK and other European markets, but were flat in the US despite a significant increase in marketing.
The Star Wars Millennium Falcon was its best-selling toy again, ahead of the Amusement Park Roller Coaster and the Porsche 911 GTS RS.
Bali Padda, the new chief executive of the Danish firm, said it would seek to improve results in the US this year.
Mr Padda, who is from the UK and is the first non-Dane to run the business, also said Lego continued to "see strong potential in China".
China is a major part of Mr Padda's growth strategy, but the firm has warned that copycat Lego toys are a major problem in the country.
In an interview with the BBC in December, the boss of Lego's new Chinese factory could not tell the difference between a real and a fake Lego figurine.
Worldwide, Lego sold more than 75 billion parts, 3,700 shapes and launched 335 new sets last year.
However, US toymaker Mattel had sales of $5.46bn, staying ahead of Lego even though its sales declined by 4%.
Hasbro, which makes My Little Pony and Nerf guns, was the world's third largest toymaker with $5.02bn in sales last year.
Lego hit record sales last year, but could not dislodge Barbie maker Mattel as the world's biggest toy company.