The Real Madrid boss saw off competition from Chelsea’s Antonio Conte and Juventus coach Massimiliano Allegri to clinch the coveted accolade.
Zidane enjoyed a stunning season last term, as he guided Real to a La Liga and Champions League double.
Speaking after being presented with the award, Zidane said: “I’d like to thank all of the players for making this possible.
“This is a very special prize.”
Real’s Champions League success last term was the 11th time they have lifted Europe’s elite prize.
The initial list of nominees for the Coach of the Year prize included Carlo Ancelotti, who was recently sacked by Bayern Munich, as well as Germany coach Joachim Low.
The ceremony rounded off an excellent evening for Real, as Cristiano Ronaldo took the Best Player award, pipping his Barcelona rival Lionel Messi in the process.
When asked for his thoughts about Ronaldo before he won the prize, Zidane said: “Ronaldo is the best player by far of his generation.
“In big games he always makes a difference.
“All of the prizes he’s won are deserved, his work and his commitment make him the best.
“It is his job. It shows that he wants to be the best and he is.”
Ronaldo however fired a blank in Real’s 3-0 win over Eibar on Sunday.
Thibaut Courtois insists Antonio Conte has full backing of the players
We are happy to show that we are ready to fight. We all know what would have happened [more debate over Conte’s future] if we had lost against Watford.
“There was a moment when we were 2-1 down, we were having difficulties and Watford could have made it 4-1. It was very important to come back to win.
“In 2015 under Mourinho we wanted to fight as well but the games didn’t turn out well for us, there was too much bad luck. Different things happened.
“But we are showing we want to fight now, firstly as a group of players. We want to win games. We don’t want to lose. We want to fight for ourselves too. It is important for us.
“Some of us remember what happened two years ago – and we don’t want the same thing to happen.”