Salah became the second Egyptian in history to win the prestigious award after Al Ahly legend Mahmoud El-Khatib in 1983.
Egypt are playing in their first World Cup finals since 1990, with Salah playing a vital part in their qualification, scoring both goals in their 2-1 win over Congo last October that put them into the finals. Egypt had been absent from the World Cup for 28 years.
Salah succeeded Riyad Mahrez who was the recipient of the top CAF award in 2016.
He also starred for resurgent Egypt, who past year finished runners-up to Cameroon in the Africa Cup of Nations and secured a first World Cup appearance since 1990.
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The 25 year old Salah beat his Liverpool team-mate and Senegal winger, Sadio Mane, to the coveted award.
After 26 appearances for Liverpool in all competitions, Salah has scored 23 goals and registered eight assists.
"It's never easy to win a big award like that", Salah said on Thursday. I would like to dedicate it to all the kids in Africa and Egypt.
The Egyptian worldwide is second in the league goal-scorer charts behind Tottenham hitman Harry Kane who took his total to 18 and 24 in all competitions with 8 goals last month.
Although Egypt lost in the African Cup final to Cameroon at the beginning of the year, the team returned to the tournament after seven years without qualifying and made it all the way to the final.