The second World Happiness Report, published by the UN Sustainable Development Solutions Network and the Earth Institute of Columbia University, vaults the Swiss ahead three places from the previous year.
Switzerland finishes ahead of fifth-ranked Netherlands, Sweden, Canada, Finland, Austria, Iceland and Australia.
The United States ranks 17th, while the UK is 22nd.
Swiss neighbour France is in 25th place, just ahead of Germany.
Sub-Saharan African countries, where residents are least satisfied with their lives, Rwanda, Burundi, the Central African Republic, Benin and Togo, come last in the rankings.
The report uses assessments of wellbeing using polling data conducted by Gallup from 2010-12 to establish the rankings of 156 countries.
Six key factors also help determine the rankings, including real GDP per capita, healthy life expectancy, having someone to count on, perceived freedom to make life choices, freedom from corruption and generosity.
“There is now a rising worldwide demand that policy be more closely aligned with what really matters to people as they themselves characterize their well-being,” Professor Jeffery Sachs, one of the report’s authors, said in a statement.
“More and more world leaders are talking about the importance of well-being as a guide for their nations and the world,” Sachs said.
The report “offers rich evidence that the systematic measurement and analysis of happiness can teach us a lot about ways to improve the world’s well-being and sustainable development.”
Switzerland's high ranking comes after a report from the World Economic Forum named the country the most competitive in the world for the fifth year in a row.