In all they won 11 of their 12 games in 2018 with the only setback coming in the first of the three-match series in Australia.
New Zealand flyhalf Beauden Barrett, who was also nominated, won the player of the year award in 2017 and 2016.
Sexton is the first non-New Zealand winner since Frenchman Thierry Dusautoir in 2011 and the second Irishman after Keith Wood, who won the inaugural edition in 2001.
New Zealand had claimed the team of the year award every year since 2009 but that also went to Ireland, for the first time.
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The women's player honour went to France fullback Jessy Tremouliere, while South Africa winger Aphiwe Dyanti won the breakthrough player award.
The All Blacks were not overlooked altogether as lock Brodie Retallick's score against Australia in Sydney, finishing off an 80-metre move, was voted try of the year.
(Reporting by Mitch Phillips, editing by Ken Ferris)
