Perth Lord Mayor Lisa Scaffidi has finished runner-up in the international 2012 World Mayor Project.
The top honour was awarded to Bilbao Mayor Iaki Azkuna from Spain who transformed Bilbao from an industrial city to a tourism and arts hub.
Ms Scaffidi was awarded a commendation award from the judging panel made up of the fellows of The City Mayors Foundation.
Senior Fellow Tann vom Hove said Ms Scaffidi had raised Perth's international profile since becoming mayor in October 2007.
"Under Mayor Scaffidi's leadership, Perth has become Australia's third city after Sydney and Melbourne," he said.
Ms Scaffidi said she awoke to the news on Tuesday and was honoured to receive the commendation.
"(I) appreciate all who made supporting testimonials," she tweeted.
The World Mayor Project is run by the the City Mayors Foundation, an international think tank and campaigning organisation on urban affairs.