Dubai beat the challenge from Izmir, Turkey, Sao Paulo, Brazil and Yekaterinburg, Russia after three rounds of voting by delegates of the 168-nation Bureau International des Expositions in Paris.
Dubai bagged 116 votes beating its closest competitor Ekaterinaburg of Russia which bagged 47 votes in the final round of voting. Izmir of Turkey and Sao Paolo of Brazil were eliminated in earlier rounds.
Emirates minister Reem Al Hashimi said Dubai was a city "capable of hosting the world" and promised visitors an "unforgettable experience" if it won the bid.
With a smartly calibrated blueprint, the UAE launched the country's campaign to host the 2020 World EXPO two years ago.
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In essence, the third largest global non-commercial event, following only the Olympic Games and the FIFA World Cup in terms of size and significance, is a win-win situation for the Emirate.
The last World EXPO was held between May 1, 2010, and October 31, 2010 in Shanghai, China.
More than displaying major technological novelties, the EXPOs role is oriented toward interpreting the collective challenges that humanity is faced with in current conditions and environments.
"The EXPOs are unique events of international cooperation dedicated to the communication of innovation and promotion of a global dialogue on themes that engage the entire world community," Vicente Gonzalez Loscertales, Secretary-General of the Bureau International des Expositions (BIE), said.
Dubai authorities expect the Expo 2020 will generate USD 23 billion between 2015 and 2021, and estimate it will cost USD 8.4 billion to organise, media reports said.
Ahead of the announcement in Paris many business magnates in Dubai had backed the economic and transport hub of the UAE to win the bid.
Emma Cullen, The Capital Club's General Manager said that Dubai is abuzz with talk about the announcement.
"The Club's halls have been filled with discussions and debates surrounding the topic and the consensus is clear, Dubai is in it to win it. We are looking forward to a truly memorable event and to celebrating yet another remarkable milestone here in Dubai," Cullen said.