Khamenei was chosen out of 11 candidates - selected by human rights experts - including North Korean leader Kim Jong-Il, President Robert Mugabe of Zimbabwe, and Myanmar's General Than Schwe.
Out of 4145 votes, more than 3000 were given to Khamenei.
The competition's organizers said the new annual prize was to be awarded to "an individual who, during the preceding year, shall have done the most to inspire hostility among his people and between nations, significantly increased the level of human suffering, ruined human livelihoods and created war and mayhem".
Students at the university voted via the social networking website Facebook and at university institutions.
"The idea behind the prize is to remind the world about the ongoing genocide and torture that affects millions of people whose souls are broken on a daily basis in places that are living hell," Professor Nina Witoszek, one of the prize's founders, said.