The 28-year-old American became only the second player in history to average a triple-double for an entire season.
He took the award over Houston Rockets guard James Harden and San Antonio Spurs forward Kawhi Leonard.
Golden State forward Draymond Green was named the best defensive player after winning the NBA title.
Westbrook has had a record-breaking season becoming the first player since Oscar Robertson in 1962 to average a triple-double across the season.
He also set the new standard by recording 42 triple-doubles, one better than the former single-season mark set by Robertson.
And he made NBA history scoring the highest ever triple-double with 57 points, 13 rebounds and 11 assists against Orlando Magic.
"It was obviously an amazing season for me but without these guys and the rest of our guys that are not here, none of this would be possible," Westbrook said.
"So this award is not for me. This is for all you guys and I am very thankful to have you guys in my corner. You guys are my brothers for life."
A triple-double means a player has recorded a double-digit number in three of five statistical categories - points, rebounds, assists, steals, and blocks.
Before the season critics had doubted whether Westbrook would continue to thrive following the departure of former MVP Kevin Durant - who left Thunder in the off-season.
Durant went on to secure his first NBA title with Golden State, but despite the loss, Westbrook-led Thunder recorded 47 wins, just eight fewer than the previous campaign.
Among the night's other recipients at the first-ever NBA Awards, Mike D'Antoni was named Coach of the Year after leading Houston to 55 wins in his first season.
Milwaukee Bucks guard Malcolm Brogdon was named Rookie of the Year, while Houston Rockets guard Eric Gordon earned the Sixth Man Award for his work off the bench as a substitute.
Oklahoma City Thunder point guard Russell Westbrook has been named the NBA's Most Valuable Player of the 2016-17 season.