It follows an astonishing season during which he picked up two more Grand Slam titles.
The Swiss, 36, returned from six months out with knee trouble to win the Australian Open before picking up a record eighth Wimbledon crown and ended the season with a 52-5 record.
He is currently ranked world number two behind his great rival Rafael Nadal.
Federer previously won the award, which is voted for by the public, in 2004, 2006 and 2007. Muhammad Ali and Usain Bolt have each won it three times.
“It makes me incredibly proud that the UK public have chosen me as the BBC overseas sports personality of the year for 2017,” said Federer.
“The support that the UK crowds give me whenever I'm here is amazing and to be recognized on the shortlist alongside some of the greatest sports people of all time is extremely humbling.”
He overcame competition from American football quarterback Tom Brady, swimmer Katie Ledecky, para-athlete Tatyana McFadden, athlete Sally Pearson, and darts player Michael van Gerwen.
Federer and the other award winners will be honoured during Sunday's BBC Sports Personality of the Year ceremony in Liverpool.