According to the 18th Mercer Quality of Life study which examined socioeconomic conditions of 230 global cities, Vienna, a city of nearly 1.8 million people, is the world's best city, followed by Zurich, Auckland, Munich and Vancouver.
While famous cities like London, Paris and New York failed to make a cut even in the top 30s, Baghdad was named as the worst city in the world.
Among Indian cities, Hyderabad topped the rankings at 139th position, followed by Pune at 144, Bangalore 145, Chennai 150, Mumbai 152, Kolkata 160 and national capital Delhi at 161.
The study examined social and economic conditions, health, education, housing and the environment and is used by big companies to assess where they should locate and how much they should pay staff, the Guardian reported today.
German-speaking cities dominate the rankings with Vienna joined by Zurich, Munich, Dusseldorf and Frankfurt in the top seven.
"I live in a 100 sq metre turn-of-the-century apartment in the city centre. But my rent is just 800 euros (625 pounds) a month," Viennese-born Helena Hartlauer said, adding that she was not surprised at her city's top position.
She said the social democratic government has a long tradition of investing in high-quality social housing, making Vienna almost uniquely affordable among major cities.
According to the World Bank, Austria has one of the highest figures for GDP per head in the world, just behind the US and ahead of Germany and Britain, the report said.
"There are more students in Vienna than any other German-speaking city. It's a very fast growing, young and lively city...You don't realise how safe Vienna is until you head abroad," Hartlauer said.
The European migrant crisis, which has seen large numbers of refugees and asylum seekers pass through Vienna en route to Germany, has had little impact on the city. War and political unrest are behind all the worst-ranked cities in the world.