Corry was rewarded for leading the Tigers to their first Guinness Premiership and EDF Energy Cup double and for his "aptitude in adversity" at Test level.
The judging panel were impressed at Corry's ability to produce huge individual performances in an England side which struggled for much of the season.
Corry beat off competition for the award from New Zealand captain Richie McCaw, the All Blacks fly-half Dan Carter and Argentina full-back Juan Martin Hernandez.
"He deserves the award for his incredible consistency despite England's performances under his captaincy," said Alastair Hignell, the former England international and member of the judging panel.
Richard Hill was named coach of the year for guiding Bristol, a club many had tipped for relegation, into the Premiership semi-finals and next season's Heineken Cup.
Rugby World editor Paul Morgan said: "It was a remarkable achievement. Richard Hill deserves special praise in a season when we have seen some outstanding coaches."
Leicester's Pat Howard and Pierre Berbizier, who led Italy to their first away win in the Six Nations, were runners-up.
Wales fly-half James Hook was voted young player of the year after bursting onto the international scene with some brilliant performances, most notably against Australia in November and England during the RBS 6 Nations.
The outstanding achievement award went to Argentina for their 25-18 victory over England at Twickenham in November.
The Rugby World Awards are the longest running in the game and the only ones to span the season from September to May and incorporate players and coaches from both hemispheres.
The 2007 Rugby World Award winners:
Player of the year: Martin Corry. Runners-up: Dan Carter, Richie McCaw and Juan Martin Hernandez.
Coach of the Year: Richard Hill. Runners-up: Pierre Berbizier and Pat Howard. Young player of the year: James Hook.
Runners-up: Tom Rees, Dominic Waldouck and Francois Steyn.
Outstanding achievement: Argentina's win at Twickenham.
Runners-up: Llanelli's 20-19 Heineken Cup win in Toulouse; New Zealand's 47-3 win over France in Lens and Leicester's 13-6 Heineken Cup victory over Munster at Thomand Park.