It ranked behind San Miguel de Allende of Mexico, Udaipur of India and Japan's Kyotobased on 700,000 votes of readers that rated cities on criteria such as landmarks, culture, food, friendliness, shopping and value.
Hoi An is ideal for foodies, with banh mi (Vietnamese sandwich) and cao lau (roasted pork with thick Vietnamese noodles) being favorites. For history lovers, the city is a UNESCO World Heritage Site with ancient architecture and trading port well preserved.
Tourists can fly into Da Nang International Airport and then take a bus or car for a 30-minute drive to reach Hoi An.
Chiang Mai in Thailand came in fifth in Travel+Leisure's list and Bangkok ranked seventh.
In Asia, Hoi An ranked third after Udaipur and Kyoto.
Earlier, Vietnam's largest island Phu Quoc was named as world's second most beautiful after the Maldives in the same awards.