The Scottish islands topped the Bank of Scotland’s rural quality of life survey, jumping up 45 places from its spot last year.
The survey found Orkney benefited from low crime rates, quiet roads, low anxiety levels, good health and a high employment rate.
People in Orkney were also said to be most satisfied with life.
Graham Blair, mortgage director at Bank of Scotland, said: “The Orkney islands is a stunning part of Scotland with some beautiful scenery.
“Pair this with one of the lowest population densities and traffic levels in Scotland, as well as the lowest levels of anxiety and highest life satisfaction ratings, and it's not surprising that the Orkneys offer a quality of life that is unmatched elsewhere in rural Britain.
“The Shetland Islands and Western Isles continue to dominate the Scottish rural quality of life top three for another year, ranking well in a lot of similar categories to Orkney.
“If it is a rural life you are after, then nothing beats being up north on one of Scotland's many islands.”
It came only months after the same islands were rated the second best place to live in the UK.