Jamaican sprinting icon Usain Bolt and American gymnast Simone Biles were named Laureus Sportsman and Sportswoman of the Year respectively.
The retired German race drive beat the likes of Van Niekerk, Ethiopian world-record breaker Almaz Ayana, English Premier League champions Leicester City, European Championship quarter-finalists Iceland and Olympic Rugby Sevens gold medallists Fiji.
“To me it is just a massive privilege and a honour to be nominated with the guys, whatever happens tonight I am grateful I was here,” Van Niekerk said ahead of the evening’s awards.
It the second major award Van Niekerk missed out on after legendary Jamaican sprinter Usain Bolt won the male IAAF World Athlete of the Year award in 2016.
Van Niekerk still has the Best Male Athlete of the 2016 Rio Games by the Association of International Olympic Committees (Anoc) he received last year.
The South African based charity Waves for Change waved the country’s flag when it was rewarded the Laureus Sport for Good Award.
Meanwhile, retired American swimming sensation Michael Phelps received yet another accolade walking away with the Comeback of the Year Award.
Speaking after receiving his award, the most decorated Olympian of all time said losing his 200m butterfly crown at the London 2012 Games played a major role in his comeback in 2014.
“I thought if I win the 200m fly in London, I probably wouldn't come back and I can look back on my career and say the 200m fly in Rio was probably my greatest race in my Olympic career,” Phelps said.
“I didn't think I was going to swim that race at the Olympics and things started to start to come together.
“I don’t think I ever had to dig that deep for a race ever in my career, and that is something I was proud to have back after the loss in 2012.
“But I can say I am excited to see what Chad does over the next four years.”
Phelps went on to add five more gold medals at the Rio Games, beating Le Clos in the 200m butterfly, with the South African missing out on a podium spot in the race.