The Institute for Urban Strategies on Wednesday released its first edition of the ranking, which covered 72 cities excluding Tokyo.
The cities were rated using a total of 83 indicators across six categories — economy and business, transport and accessibility, environment, life and residence, culture and interchange, and research and development — based on statistical results and hearings with local residents.
Kyoto was highly rated for its universities and abundant tourism properties, including historical and cultural assets, the think tank said.
Fukuoka came in second on the back of its powerful economy. A number of special deregulation zones are located in the southwestern hub.
Despite scoring poorly when it came to crime, Osaka ranked third thanks to robust private consumption and investment, and its convenient transportation network.
Nagoya came fourth, with many companies in the city having high global market shares, while Yokohama ranked fifth.