MTV says the fivesome is "the clear choice for the top spot" after a year that included two No. 1 albums, hits such as "What Makes You Beautiful" and a sold-out world tour.
One Direction's Louis Tomlinson calls Thursday's honor "the icing on the cake."
MTV's team of music staffers chose Carly Rae Jepsen's "Call Me Maybe" as song as the year.
One Direction placed third on the U.K. version of "The X Factor" in 2010 and made their U.S. debut in March with the No. 1 album "Up All Night." Their sophomore album, "Take Me Home," was the year's third-highest debut.
The group also made Barbara Walters' most fascinating people of 2012 list.