St Dominic's, in Harrow, north London, is the third sixth-form college to win the top rating this year and the 20th since Ofsted inspections began in 2001.
Leadership and management at the college was judged to be outstanding, as were three of the six curriculum areas, with the remaining three rated good.
The proportion of Catholic students increased from 43 per cent last year to 50 per cent this year. Around 47 per cent of the college's students are from Indian or other Asian backgrounds.
The inspectors said in their report, published today: "The college is a multicultural community in which many faiths are acknowledged and celebrated. Tolerance and respect for diversity are strong features of the culture. Large numbers of non-Catholics apply to the college each year."
Patrick Harty, who became principal two months before November's inspection, said the college's A-level pass rate was 98 per cent last year, and it was among the three best-performing colleges in the country. He added: "The inspectors visited our lessons of religious and moral education, involving students of all faiths, and I believe they understood the college better as a result of that.
"Our ethos is as important as academic achievement, and a values-based education provided in a Catholic college is very important to students from other religions as well."
Winstanley and Hereford are the other two sixth-form colleges to win the top accolade this year.
At Winstanley, in Wigan, Lancashire, six of the seven curriculum areas were rated outstanding.
Principal Kevin Watson said: "This is an outstanding report that captures many of the core values of we have worked hard to promote."
Jonathan Godfrey, Hereford's principal, welcomed the emphasis on self-evaluation. He said: "The profile of grades awarded for teaching exactly matched those produced by the college's own lesson observation programme.
"I am sure the proposed regular but lighter touch from inspectors will lead to more accurate and ultimately more useful self-evaluation."