After being named in second place by last year's World Happiness Report, the Scandinavian country is now third after Finland jumped into first and pushed last year's occupants Norway into second.
Iceland, Switzerland, the Netherlands, Canada, New Zealand, Sweden and Australia round out the top ten.
The United States, 14th last year, is now 18th, while the United Kingdom is in 19th, the same spot it occupied in 2017.
The 2018 edition of the World Happiness Report, released annually since 2012 by the Sustainable Development Solutions Network (SDSN), was released on Wednesday afternoon.
Nordic and European countries normally dominate the top end of the ranking.
The list is is calculated using measures for factors like levels of caring, freedom to make life decisions, generosity, good governance, honesty, health and income.
For the first time, this year's study also evaluated happiness from the point of view of migrants in each country.
John Helliwell, an economist at the University of British Columbia and one of the report's co-editors, said there were many similarities between countries in the top ten.
“The most striking finding of the report is the remarkable consistency between the happiness of immigrants and the locally born,” Helliwell told news agency AP.
“Those who move to happier countries gain, while those who move to less happy countries lose,” Helliwell added.
Meik Wiking, CEO of the Copenhagen-based Happiness Research Institute, told AP that the five Nordic countries that reliably rank high in the index “are doing something right in terms of creating good conditions for good lives.”
Happiness revealed in the survey comes from healthy amounts of both personal freedom and social security, outweighing “some of the highest taxes in the world,” Wiking said to AP.
“Briefly put, [Nordic countries| are good at converting wealth into well-being,” Wiking added.
A total of 156 countries took part in the survey, which is is compiled using Gallup polls asking people to evaluate various aspects of their lives on a scale from 0 to 10.
- Denmark no longer world's happiest country: report (from 2017)
- Danes regain 'world's happiest people' title (from 2016)