Canberra led the regional ranking while Australia topped the overall country rankings, followed by Norway.
The OECD ranked 362 regions of its 34 member nations in its survey.
It used nine measures of wellbeing, including income, education, jobs, safety, health and environment.
Five Australian cities including Sydney, Melbourne and Perth were also in the top 10.
Other top-scoring places included the states of New Hampshire and Minnesota in the US.
On the other end of the scale, Mexican states constituted all 10 of the bottom regional rankings.
On a country level, Mexico, Turkey, Hungary, Poland, Slovakia were ranked as the hardest places to live.
The OECD rankings were met with pride by some Australian media outlets and surprise by others.
While the Sydney Morning Herald headline said "Canberra the best place to live, in the world's best country", the rival Herald Sun headline went "Is Canberra really the world's best city? More like capital punishment".
The Canberra Times said the rankings "yet again confirmed what many Canberrans have long known; that our city is the best place to live in the world".
An opinion piece on popular website news.com.au, owned by News Corp, said: "Canberra is not, as you might believe, a desolate wasteland of bleak suburbia punctuated by shiny expensive monuments, fake lakes, porn megastores, snake-riddled grasslands and endless, befuddling roundabouts."
The OECD study, while not comprehensive, is one of the few to analyse the quality of life in countries.
"Recent years have seen an increasing awareness that macro economic statistics, such as GDP do not provide policy-makers with a sufficiently detailed picture of the living conditions that ordinary people experience," the OECD said on its website.
"Developing statistics that can better reflect the wide range of factors that matter to people and their well-being (the so called "household perspective") is of crucial importance for the credibility and accountability of public policies and for the very functioning of democracy."