Djokovic claims the honour for the second successive year, while Williams wins it for the third time.
Serb Djokovic finished top of the world rankings in 2012 after a season which saw him win the Australian Open and reach the final of both the French and US Opens.
He said: "I am proud to have been named ITF world champion for the second successive year. It was very difficult to follow up such a successful season in 2011, but it was extremely satisfying to win another Grand Slam title, reach two other major finals and finish the year at number one."
Williams claimed the women's gong despite finishing the year ranked only third behind Victoria Azarenka and Maria Sharapova.
However, she did win two Grand Slam titles - Wimbledon and the US Open - plus the Olympic singles gold for the first time, finishing the year with an impressive 58-4 win-loss record.
The 31-year-old American said: "It means a lot to be named ITF world champion for the third time. It has been such an amazing experience this year to win the Olympics and two Grand Slam tournaments, and I look forward to having an awesome 2013."
ITF president Francesco Ricci Bitti lauded the pair, saying: "This has been another memorable year for our sport, highlighted by the most successful Olympic tennis event in history.
"In such a strong era for men's tennis, it is a great achievement for Novak to retain his year-end number one ranking, while on the women's side Serena proved herself to be one of the finest competitors of all time."
In doubles, Bob and Mike Bryan were named men's world champions for a remarkable ninth time in 10 years, while Sara Errani and Roberta Vinci were honoured for the first time on the women's side.
Canada's Filip Peliwo and Taylor Townsend, of USA, were named junior world champions, with Esther Vergeer and Stephane Houdet the wheelchair recipients.
The ITF's selection of its senior world champions is based on an objective system that considers all results during the year, but gives weight to the Grand Slams, the Olympics and the Davis and Fed Cup competitions.
All the winners will receive their awards at the ITF World Champions Dinner which takes place in Paris on June 4.