The car, introduced as a concept vehicle at last year's show, is the first powered by a clean diesel engine to win the award.
Ron Cogan, editor and publisher of Green Car Journal, which sponsors the award, said the Jetta received high marks from nine judges for technology, miserly fuel economy of 41 miles per gallon on the highway and its relatively low price of $21,990.
The Jetta also meets strict emissions standards in all 50 states.
"It raises the bar significantly in environmental performance," Cogan said.
"This all the more impressive when you consider the Jetta TDI is a clean diesel, achieving the kind of fuel economy offered by gasoline electric hybrids but in a more affordable way."
The Jetta beat out the BMW 335d, Ford Fusion Hybrid, Saturn Vue 2 Mode Hybrid, and smart fortwo micro car that runs on premium fuel.
Last year's winner was the Chevrolet Tahoe Hybrid.
Stefan Jacoby, chief executive officer of Volkswagen Group of America said that it was an honor to win the award.
"We believe our Jetta TDI truly offers a no-compromise alternative-fuel driving experience that provides our customer the best of both worlds-excellent fuel efficiency combined with a dynamic driving experience.
"With more than 8,000 units already sold since its mid-August market introduction, it's clear that a Volkswagen clean diesel is what the people want."
Volkswagen's Jetta TDI features a 2.0-liter, turbocharged fuel injection engine featuring. The new engine is also considered "exceptionally quiet" for a diesel.
Earlier this year the Jetta TDI set a new Guinness World Record for Lowest Fuel Consumption as it averaged 58.8 miles per gallon as it traveled through the 48 contiguous states.
"Drivers can now feel good about making an environmentally friendly choice and feel good about driving," Jacoby said.
To see more of the Daily News, or to subscribe to the newspaper, go to http://www.dailynews.com. Copyright (c) 2008, Daily News, Los Angeles Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index