Eighteen-time grand slam winner Navratilova believes the current format disproportionately rewards players for the quantity of wins, rather than the quality.
In her eyes, Wimbledon champion Petra Kvitova is more deserving of a place at the top.
Speaking at the Australian Open, Navratilova said: "Clearly nobody feels that Wozniacki is a true number one.
"If we still had the same ranking system we were using six years ago, when they were giving bonus points for beating (top) players, Kvitova would have ended up number one because she had beaten more top players than Wozniacki.
"Wozniacki doesn't even have that great a record in her career or the last four years over the top 10 or against the top five, whereas Petra you feel really imposes herself on the match and any player.
"With the absence of Serena (Williams), we need some superstars that you really feel like are holding their own. I think Petra has that possibility."
Wozniacki is still seeking her first grand slam title, but that should not be held against her according to Navratilova.
She added: "I think if you won 15 tournaments and not slams, you're number one because you have the best record of anybody. So I don't think the asterisk is not having won a slam.
"The year before (2010) she was number one because she had by far the best record, period. Never mind the slams.
"Last year it was even with Petra, but she had two majors with the season-end Championships and Wimbledon.
"Caroline doesn't need to explain why she was number one, it's the WTA that needs to explain that."