It means that the Manchester college is first to get a perfect score under the new inspection system.
The previous title-holder, South Cheshire college in Crewe, was rated outstanding in 13 out of 16 areas, but has not been inspected under the new, simpler system.
Bill Moorcroft, principal at South Trafford, said: "We are too modest to say we are the best in the country. It's a hard thing to judge. We measure ourselves against ourselves, not against anybody else."
South Trafford is a general FE college with 10,000 students, including around 2,300 teenagers on full-time courses, which are mainly in vocational subjects.
It is surrounded by grammar schools and has 12 per cent ethnic minority students, compared to 6 per cent in the local population.
At its last inspection, the college was rated good in seven curriculum areas, satisfactory in five and unsatisfactory in science and maths.
Five years later, student achievements and teaching were judged outstanding, with particular praise given to programmes to help disadvantaged students.
"Leadership and management are outstanding," the report said. "The principal provides inspirational leadership and is ably supported by the senior team."
Mr Moorcroft attributed the transformation to a sense of purpose which was shared by all staff, and a clear, critical look at their successes and failures.
But the principal's role is not without frustrations. The inspectors praised the "well-organised and diverse" provision of adult education courses.
Mr Moorcroft admitted that, like many other colleges, South Trafford was facing cuts.
"If you take pound;500,000 off the adult learning budget, it's definitely going to have a significant impact on the staffing of the college," he said.
He said Trafford already has one of the lowest budgets in the country for adult education.
"It's almost as if our success is in spite of government policy," Mr Moorcroft said. "I don't want to be critical, though.
"It's our responsibility to make sure the college is fit to meet the challenges of the future, whatever these might be." Government demands had helped the college to become more focused, he acknowledged. It is this pragmatic attitude that has informed the college's response to the initiative to educate under-16s in FE.
While South Trafford was praised by inspectors for the 96 per cent pass rate achieved by its younger teenagers, the previous top college was a well-known 14-16 refusenik.
David Collins, principal of South Cheshire college, wrote in FE Focus: "For the cynical, the move to a 14-19 phase could be seen as a bid to solve discipline and curriculum problems in schools. It is certainly not being funded by the Government as the key curriculum change that it is sometimes argued to be."
Mr Moorcroft said he believes the role of principal has changed as centralised control over colleges has increased. "Maybe I have a different view of the role of principal from others. I don't believe we are able to develop our own strategy in the present environment," he said.
Two criticisms - that a few A-level and work-based learning courses have low success rates and that the college does not promote extracurricular activities - proved that, at least according to Ofsted, there is always room for improvement.
* The new inspection system examines: effectiveness of provision; capacity to improve; achievement and standards; quality, and leadership and management.