They leap-frogged Uruguay because the points which the South American side earned in winning the Copa America one year ago lost some of their value under the complicated system of co-efficients used to determine the rankings.
Explained!Learn the equation for the FIFA rankings in the new Season Preview issue of FFT
There were few other changes with only 12 full internationals played in the last month.
Spain are top while five-times world champions Brazil remained outside the top 10.
South Sudan have entered the rankings for the first time after playing their inaugural full international last month.
A 2-2 draw at home to Uganda in a friendly played in Juba on July 10 has put South Sudan 199th in the 209-team table.
South Sudan, which became fully independent last year, joined FIFA in May after being voted in at the annual Congress.
The team, made up nearly entirely of home-based players, is coached by widely-travelled Serb Zoran Djordjevic, who has also taken charge of Yemen, Sudan and Bangladesh in a career which has taken him around Africa and Asia.
Rankings (previous ranking):
1. (1) Spain
2. (2) Germany
3. (4) England
4. (3) Uruguay
5. (5) Portugal
6. (6) Italy
7. (7) Argentina
8. (8) Netherlands
9. (9) Croatia
10. (10) Denmark
