Karl, who turns 62 Sunday, received 62 first-place votes and 404 points in a vote of writers and broadcasters who cover the NBA. Miami's Erik Spoelstra was second in the voting with 190 points and New York's Mike Woodson (127) was third.
It was Karl's first Coach of the Year Award, which is formally known as the Red Auerbach Trophy .
"I am honored and energized to represent coaching and be their ambassador as coach of the year and continue to symbolize the great coaching there is in the NBA," Karl said in a statement Wednesday. "There are probably seven or eight guys who are deserving of it and another 10 or 15 other coaches who have done a great job and aren't getting any recognition."
The Nuggets were 57-25 this past season, which was the third-best record in the NBA Western Conference. However, Denver was eliminated by the Golden State Warriors in the first round of the playoffs.
Karl previously coached at Cleveland, Golden State, Seattle and Milwaukee. He took over in Denver prior to the 2004-05 season and is 423-257 since then. His overall coaching record is 1,131-756. The win total is sixth-most in NBA history.