She earned $1.4 million (£1.15m) more than American great Williams who had topped the list for the last four years.
Maria Sharapova had held the record for 12-month earnings for a female athlete, having made $29.7 million (£24.3m) in 2015.
Female tennis players have always occupied top spot on Forbes's women's list since 1990 with either Williams or Russian Sharapova leading the way from 2004.
Osaka burst into the limelight by beating Williams in the 2018 U.S. Open final - a highly-controversial match in which Williams was given three code violations by the umpire.
The Japanese then won the next Grand Slam, the 2019 Australian Open, although her form has dipped since and she has fallen from world number one to 10th on the WTA rankings.
Highlights: See how 15-year-old sensation Gauff knocked out defending champ Osaka
Florida-based Osaka's mixed heritage - she has a Japanese mother and Haitian-American father - her engaging personality and attacking style of play have combined to make her one of the world's most marketable athletes.
Part of the stable of management group IMG, Osaka currently has 15 sponsorship deals, including with global brands such as Nike, Nissan Motors, Shiseido and Yonex.