Powell is the second Jamaican to win this prestigious award, following in the footsteps of Merlene Ottey, who did same in 1990.
And Chinese star Liu Xiang won the award for the performance of the year for his stunning world record breaking 12.88sec in the 110m hurdles at
Ethiopian Meseret Defar took the women's best performance honours for breaking the 5,000m world record in
Powell and Richards were also given a cheque for US$100,000 each.
Their victories were hardly surprising as the pair both went unbeaten throughout the season and shared the Golden League jackpot with American 400m runner Jeremy Wariner.
Powell twice equalled his own 100m record mark of 9.77sec, which he shares with drugs-tainted American Olympic champion Justin Gatlin, who may yet be stripped of his share of the record.
Richards took 15 straight victories at 400m and broke the 22-year-old American record with 48.70sec to become the seventh fastest woman of all time.
"Last year I wanted to win this title, but I didn't because I got injured," said Powell.
Only Liu, who is preparing for the Asian Games, was not in
Other prize winners were
Previous World Athletes of the Year
1988 Carl Lewis (USA) / Florence Griffith-Joyner (USA)
1989 Roger Kingdom (USA) / Ana Fidelia Quirot (CUB)
1990 Steve Backley (GBR) / Merlene Ottey (JAM)
1991 Carl Lewis (USA) / Katrin Krabbe (GER)
1992 Kevin Young (USA) / Heike Henkel (GER)
1993 Colin Jackson (GBR) / Sally Gunnell (GBR)
1994 Noureddine Morceli (ALG) / Jackie Joyner-Kersee (USA)
1995 Jonathan Edwards (GBR) / Gwen Torrence (USA)
1996 Michael Johnson (USA) / Svetlana Masterkova (RUS)
1997 Wilson Kipketer (DEN) / Marion Jones (USA)
1998 Haile Gebrselassie (ETH) / Marion Jones (USA)
1999 Michael Johnson (USA) / Gabriela Szabo (ROM)
2000 Jan Zelezny (CZE) / Marion Jones (USA)
2001 Hicham El Guerrouj (MAR) / Stacy Dragila (USA)
2002 Hicham El Guerrouj (MAR) / Paula Radcliffe (GBR)
2003 Hicham El Guerrouj (MAR) / Hestrie Cloete (RSA)
2004 Kenenisa Bekele (ETH) / Yelena Isinbayeva (RUS)
2005 Kenenisa Bekele (ETH) / Yelena Isinbayeva (RUS)
See you in Jamaica.