The awards, supported by ScottishPower Renewables, RBS Group, NVT Group and the Improvement Service, were presented at a ceremony in Prestonfield House Hotel in Edinburgh.
In 14 years of The Herald awards, this was the first time we had an all-female shortlist for the top prize. In winning the accolade, Ms Sturgeon saw off strong challenges from Labour leader Johann Lamont for the way she has led her party's fightback since the election defeat 18 months ago, and Holyrood Presiding Officer Tricia Marwick for her reforms to the Parliament's proceedings.
Last night Herald & Times Group managing editor Tom Thomson told the awards ceremony: "The Scottish Politician of the Year awards rightly honour those politicians who have contributed so much to Scottish life over the past year.
"The Herald is delighted to host what has become a landmark in Scottish political life since it was launched to celebrate the opening of the Scottish Parliament."
Mr Thomson took the opportunity to make a plea to Lord Justice Leveson to steer clear of any form of state regulation of the newspaper industry when his inquiry into media ethics reports shortly. He insisted that a robust, independent system of regulation with binding sanctions offered the best way to curb the excesses of a small minority of the press.
Ms Sturgeon joins a select band of two-time winners of the Scottish Politician of the Year Award, presented by The Herald, having won it four years ago. Only Alex Salmond and former Presiding Officer George Reid have also won the award twice.
The judges made the award in recognition of Ms Sturgeon's deft handling of the health portfolio for more than five years, which culminated in steering through Parliament flagship legislation providing for a minimum unit price of alcohol.
She was also prepared to champion the issue of same-sex marriage in the face of a backlash from some sections of society, and then a Cabinet re-shuffle saw her become Infrastructure Secretary and the minister responsible for steering the Referendum Bill through Parliament, a major new role which the First Minister wanted in the safest pair of hands possible.
Although she missed out on the top award, Ms Lamont did not leave empty-handed, beating Ms Sturgeon and SNP Westminster leader Angus Robertson to win the Political Impact of the Year award. Ms Sturgeon was in contention for pushing same-sex marriage, Mr Robertson for shifting his party's stance on Nato.
Ms Lamont's award was in recognition of her politically brave decision to question the fairness and affordability of some universal benefits such as free bus travel and free personal care for the elderly.
Scottish Secretary Michael Moore, who co-signed the Edinburgh Agreement ensuring the referendum would be a straight Yes-No response to independence, won the award for Best Scot at Westminster for his strong showing as the constitutional debate heats up. He saw off the challenge of his Liberal Democrat Cabinet colleague Danny Alexander and Labour's Tom Greatrex.
The winner of the Donald Dewar Debater of the Year award, supported by NVT Group, was Aberdeenshire West SNP MSP Dennis Robertson for his moving speech on his daughter's death from anorexia, highlighting the need for action on eating disorders.
He overcame SNP Justice Secretary Kenny MacAskill, for his barnstorming pro-Nato speech at the SNP conference, and LibDem leader Willie Rennie for his feisty contributions to FMQs.
The One to Watch award for rising stars, supported by Scottish Power Renewables, was won by Glasgow MSP Humza Yousaf, promoted at the age of 26 into Mr Salmond's government this year as External Affairs Minister.
The Politics in Business Award is a new category, supported by RBS Group, to recognise politicians who have engaged with the business community.
The joint winners were Stewart Hosie (SNP) and Jim McGovern (Lab) for working across party lines to support Dundee's computer games industry.
The Scottish Local Politician of the Year category, supported by the Improvement Service, was contested primarily by Labour civic leaders who led their local parties to victory in the council election and was awarded to Gordon Matheson in Glasgow.
Argyll youngster Martha Payne, whose school meals blog became a global sensation and helped raise more than £120,000 for the Mary's Meals charity in Malawi, won the Public Campaign or Campaigner of the Year award.
Martha's aunt and uncle, Christine and Peter Helliwell, attended last night's ceremony on behalf of the schoolgirl to receive the award.
The Herald Scottish Politician of the Year Awards 2012
Scottish Politician of the Year: Nicola Sturgeon MSP (SNP)
Political Impact of the Year: Johann Lamont MSP (Lab)
Best Scot at Westminster: Michael Moore MP (LibDem)
Donald Dewar Debater of the Year: Dennis Robertson MSP (SNP)
One to Watch: Humza Yousaf MSP (SNP)
Politics in Business Award: Stewart Hosie MP (SNP) and Jim McGovern MP (Lab)
Scottish Local Politician of the Year: Gordon Matheson (Lab)
Public Campaign or Campaigner of the Year: Martha Payne
The judging Panel were Magnus Llewellin, deputy editor, The Herald (chairman); Liz Cameron, chief executive, Scottish Chambers of Commerce; Amanda McMillan, managing director, BAA Glasgow Airport; Brian Taylor, political editor, BBC Scotland; Magnus Gardham, group political editor, Herald & Times; Tom Gordon, Scottish political editor, Sunday Herald; Colin Mackay, political editor, Bauer Scotland
KEY SPONSORS... THEIR VIEW
Keith Anderson, chief executive of ScottishPower Renewables, said: "The evening always demonstrates that there is a great deal of co-operation across parties, parliaments and governments. It is undoubtedly a fascinating time in Scottish politics, and we would like to congratulate all of the winners and nominees. I was delighted to see real strength in depth across all of the categories, from the main award to the rising stars, public campaigns and local government."
Ken Barclay, head of RBS Group's Corporate Banking Division in Scotland and chairman of the Scotland board, said: "RBS is delighted to have been involved in The Herald Scottish Politician of the Year awards. The Politics in Business award recognises some of the best examples of politicians and businesses working together to help stimulate growth in Scotland's economy. We congratulate Stewart Hosie and Jim McGovern, the winners of this year's Politics in Business award, and all the winners and nominees."
Stephen Park Brown, managing director of NVT Group, said: "As ever, The Herald Scottish Politician of the Year was a great success and we were delighted to have been a part of it. This is, without doubt, the prestige event in Scotland's civic and political calendar. We at NVT are looking forward to our continued participation in the Politician of the Year and we'd like to thank The Herald for organising it superbly."
Colin Mair, chief executive of the Improvement Service, said: "The Improvement Service is delighted to work with The Herald in honouring local political leadership, given the climate we are all moving into and the pressure on both communities and local services. Engaging local leadership will be critical to getting through the next few years."