The 28-year-old back-row forward capped a remarkable return to the 13-man code after a five-year stint in rugby union by taking the top honour at the Rugby League International Federation awards night at a gala dinner in Manchester.
Williams helped Sydney Roosters secure their first NRL Grand Final for over a decade and has been an integral part of the Kiwis side that is looking to complete a successful defence of the World Cup in Saturday's final against Australia at Old Trafford.
His team-mates paid their tribute by rising from their seats and performing a Haka while Williams was still on stage after being presented with his award by former Australian Test player Andrew Johns.
"I can't remember the last time I cried but I was a little bit teary up there, just seeing the brothers get up and show that respect," Williams said.
"I was quite shocked to get the award to be honest. It was a nice feeling to be recognised but I accept this award on behalf of my team-matches that have put me in a position to play well, coaches and of course my family."
The former All Black is the first Kiwi to win the award, which has gone to Australian players since its inception in 2008 - Billy Slater (2008 and 2011), Jarryd Hayne (2009), Todd Carney (2010) and Cameron Smith (2012).
Williams got the vote from an international selection panel ahead of Australia centre Greg Inglis and Scotland captain Danny Brough, the Super League Man of Steel, but all three were named in the 2013 international team of the year.
The team also includes England front rower Sam Burgess, whose younger brother George was named rookie of the year.
The Roosters received further recognition of their momentous year with Trent Robinson being named coach of the year following his hugely successful debut season at the club since joining them from Catalan Dragons.
Robinson won the award ahead of Wigan coach Shaun Wane and ex-Wigan boss Michael Maguire, the coach of South Sydney.
Former BARLA chief executive Maurice Oldroyd was presented with the RLIF spirit of rugby league award in recognition of his commitment to international development over more than four decades.
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- Sydney Roosters