The 23-year-old Manchester United midfielder beat Japan team-mate Yuto Nagatomo of Inter Milan and Australia's veteran goalkeeper Mark Schwarzer of Fulham to the award in Kuala Lumpur.
Kagawa produced a number of impressive displays earlier in the year as Borussia Dortmund claimed the Bundesliga title before he moved to England where he has had a low-key start and struggled with injury.
South Korean winger Lee Keun-ho collected the long-standing AFC Player of the Year award after his strong displays and goal-scoring helped Ulsan Hyundai to win the AFC Champions League this month.
Lee edged out Iranian midfielder Ali Karimi and Chinese defender Zheng Zhi to become the first Korean to win the award for players competing in Asia.
In another new award introduced by the AFC, Brazilian Rogerinho - Rogerio De Assis Silva Coutinho of Kuwait Sports Club - was named the AFC's foreign player of the year.
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