The full back star - who topped a public vote - was revealed as the winner during the Wales Sport Awards, a new event in which BBC Cymru Wales and Sport Wales celebrate Welsh sporting success.
Wales rugby union wing and international sprinter Ken Jones was the first award winner in 1954.
This year's five contenders, chosen by an expert panel, were footballer Gareth Bale, Paralympian Aled Sion Davies, cyclist Becky James, triathlete Non Stanford and Halfpenny.
But it was Halfpenny who took the top award at the Sport Wales National Centre in Cardiff and he said: "What a year it has been and to receive this award is a huge honour and to be added to a list of such Welsh talent is a real privilege.
"It has been a dream of a year and I could not have wished for it to have gone better. I have been very fortunate to have been part of some special teams like Wales and the Lions.
"To win the Six Nations again was magical in the style we did especially after the run of games we had before coming into the tournament.
"To lift the trophy after defeating England at the Millennium Stadium was a real highlight and one of the best games I have been involved with.
"To then go to Australia and be part of a winning Lions tour that had not been achieved a series victory in 16 years means it does not get much better than that."