The South Americans, who hit an all-time low of 13th last month, climbed one place to 12th thanks to a 3-0 friendly win in Sweden.
But their placing, one below Greece, is still surprisingly low as they have won 10 of their 13 full internationals played in the last year, with their only defeats against Argentina and Mexico during a tour of the United States in June.
In May, they outclassed tenth-placed Denmark 3-1 in a friendly.
England remained third, a position which many critics feel is too high given their lacklustre results over the last two years.
They are three places above Italy, who beat them on penalties at Euro 2012 in the quarter-final and went on to reach the final.
World and European champion Spain stayed top, ahead of Germany who were outclassed as they lost 3-1 to seventh-placed Argentina in a friendly last month.
Uruguay, fifth, are South America's highest-placed team.
Mali (32nd) and Libya (36th) both recorded their highest-ever rankings.
Rankings (Last month's in brackets):
1. (1) Spain
2. (2) Germany
3. (3) England
4. (5) Portugal
5. (4) Uruguay
6. (6) Italy
7. (7) Argentina
8. (8) Netherlands
9. (9) Croatia
10. (10) Denmark
