Voted on by all 116 members of the Rugby Union Players' Association (RUPA), Sharpe polled 44 points to pip fellow Wallaby Chris Whitaker for the award, which is given to the player who is adjudged to have excelled both on and off the field during 2005.
The voting was the closest in the five-year history of the award.
Flanker Phil Waugh came third with 27 points while under-fire Australian skipper George Gregan was fourth with 25 points.
Sharpe also won the award in 2002, his debut season in international rugby.
Despite the Wallabies' inconsistent form this year, Sharpe has been a mainstay of the team, playing in all 13 Tests.
He skippered Australia in their 74-7 win over Manu Samoa earlier this year, celebrating the honour with two tries.
Sharpe captained Queensland in 2005 but has accepted a lucrative offer from the Western Force for the upcoming Super 14 season.